SANITAS 2010 Annual Report

PUBLIC LIMITED LIABILITY COMPANY SANITAS
CONSOLIDATED AND SEPARATE FINANCIAL

STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2010
PREPARED ACCORDING TO INTERNATIONAL
FINANCIAL REPORTING STANDARDS, AS ADOPTED BY
THE EUROPEAN UNION, AND CONSOLIDATED
ANNUAL REPORT FOR THE YEAR ENDED

31 DECEMBER 2010 PRESENTED TOGETHER
WITH INDEPENDENT AUDITORS REPORT
Contents
Confirmation of Responsible Persons ................................................................................................................................. 4
Independent auditors report ............................................................................................................................................... 5
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS ..................................................................................... 7
General Information ............................................................................................................................................................ 8
Statements of Comprehensive Income ............................................................................................................................... 9
Balance Sheets ................................................................................................................................................................. 10
Statements of Changes in Equity ...................................................................................................................................... 12
Cash Flow Statements ...................................................................................................................................................... 13
Notes to the Financial Statements .................................................................................................................................... 15
1. General information ............................................................................................................................................... 15
2. Application of new and revised International Financial Reporting Standards ........................................................ 16
3. Accounting principles ............................................................................................................................................. 17
4. Going concern ....................................................................................................................................................... 29
5. Segment information ............................................................................................................................................. 29
6. Cost of sales .......................................................................................................................................................... 33
7. Other income ......................................................................................................................................................... 33
8. Selling and distribution expenses .......................................................................................................................... 33
9. Regulatory affairs expenses .................................................................................................................................. 34
10. Research and development expenses................................................................................................................... 34
11. Administrative expenses ........................................................................................................................................ 35
12. Financial activity, net ............................................................................................................................................. 36
13. Income tax ............................................................................................................................................................. 36
14. Earnings per share ................................................................................................................................................ 40
15. Dividends ............................................................................................................................................................... 40
16. Property, plant and equipment ............................................................................................................................... 41
17. Intangible assets .................................................................................................................................................... 43
18. Investments ........................................................................................................................................................... 45
19. Inventories ............................................................................................................................................................. 46
20. Trade receivables .................................................................................................................................................. 46
21. Other receivables................................................................................................................................................... 47
22. Cash and cash equivalents .................................................................................................................................... 48
23. Share capital .......................................................................................................................................................... 48
24. Reserves ............................................................................................................................................................... 48
25. Loans ..................................................................................................................................................................... 49
26. Finance lease obligations ...................................................................................................................................... 51
27. Other financial assets and financial liabilities ......................................................................................................... 52
28. Deferred income from subsidies ............................................................................................................................ 53
29. Trade payables ...................................................................................................................................................... 53
30. Other current liabilities ........................................................................................................................................... 53
31. Employee benefits ................................................................................................................................................. 53
32. Provisions .............................................................................................................................................................. 54
33. Operating lease commitments ............................................................................................................................... 54
34. Financial risk management objectives and policies ............................................................................................... 55
35. Related party transactions ..................................................................................................................................... 59
CONSOLIDATED ANNUAL REPORT ............................................................................................................................. 61
Period for which Consolidated Annual Report is prepared ................................................................................................ 62
1. Reporting period .................................................................................................................................................... 62
Short presentation of Public limited liability company SANITAS Group ............................................................................ 62
2. Main data about Public limited liability company SANITAS ................................................................................. 62
3. Contacts of other enterprises of SANITAS Group ................................................................................................. 62
4. Structure of SANITAS Group. Portfolios held ........................................................................................................ 63
5. Affiliates and representative offices of enterprises comprising SANITAS Group ................................................... 63
6. The main activity of SANITAS Group .................................................................................................................... 64
7. Participation in activity of organizations ................................................................................................................. 64
8. Short history of SANITAS Group ........................................................................................................................... 64
9. Aims. Values.......................................................................................................................................................... 66
Information on SANITAS Authorised Capital and Securities ............................................................................................. 66
10. Composition of SANITAS authorised capital, rights granted by shares ................................................................. 66
11. SANITAS own shares ............................................................................................................................................ 67
12. Dividends paid to SANITAS shareholders ............................................................................................................. 67
13. Data about securities trading ................................................................................................................................. 67
14. SANITAS shareholders .......................................................................................................................................... 67
15. Limitations of SANITAS securities transferring ...................................................................................................... 68
16. Special rights of control possessed by the SANITAS shareholders and description of these rights ...................... 68
17. Limitations of Companys shareholders voting rights ............................................................................................. 68
18. SANITAS shareholders agreements known to the Company according to which transferring
of the securities and/or voting rights can be limited ............................................................................................... 69
19. SANITAS agreements with intermediaries of public trading in securities ............................................................... 69
20. The changes of SANITAS share price and turnover .............................................................................................. 69
21. The changes of SANITAS share price and of NASDAQ indexes ........................................................................... 69
Information on SANITAS Management ............................................................................................................................. 70
22. Companys managing bodies ................................................................................................................................ 70
22.1. The Management Board ............................................................................................................................... 70
22.2. The Manager ................................................................................................................................................ 71
22.3 The General Shareholders Meeting ............................................................................................................... 71
22.4. SANITAS Audit Committee ........................................................................................................................... 71
23. Data about members of the Management Board, members of the Audit Committee,
Managing and Finance Directors ........................................................................................................................... 72
SANITAS group activity review ......................................................................................................................................... 79
24. Non-financial activity review .................................................................................................................................. 79
24.1. Manufacturing ............................................................................................................................................... 79
24.2. Employees and human resources policy ...................................................................................................... 80
24.3. Environment.................................................................................................................................................. 82
24.4. Research and development activity .............................................................................................................. 82
24.5. Purchases ..................................................................................................................................................... 83
24.6. Competitors .................................................................................................................................................. 83
24.7. Sales and products distribution ..................................................................................................................... 83
25. Financial activity review ......................................................................................................................................... 85
26. Plans and forecasts ............................................................................................................................................... 86
27. Main risks and risk management ........................................................................................................................... 86
28. Main features of internal controls and risk management system for consolidated financial reports preparation .... 86
29. Related party transactions ..................................................................................................................................... 87
Other information .............................................................................................................................................................. 87
30. Order of amendment of SANITAS Articles of Association ..................................................................................... 87
31. Significant agreements the party of which is SANITAS and which would come into force, be amended
or terminated in the case of change of control of the Company ............................................................................. 87
32. Agreements with Companys employees and members of managing bodies providing compensation
in the case of their resignation or dismissal without serious reason or if their employment ends because
of the change of the control of SANITAS ............................................................................................................... 87
33. Data about the Companys publicly disclosed information ..................................................................................... 87
34. Main events of 2010 .............................................................................................................................................. 87
35. Authorities of SANITAS managing bodies to issue or acquire shares ................................................................... 88
SANITAS disclosure form regarding The Compliance with The Governance Code for The Companies
Listed on The Nasdaq Regulated Market .......................................................................................................................... 89
Public limited liability company SANITAS

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS AND
CONSOLIDATED ANNUAL REPORT FOR THE YEAR ENDED 31
DECEMBER 2010
Confirmation of Responsible Persons
Following the Article No. 22 of the Law on Securities of the Republic of Lithuania and Rules on Preparation and
Submission of Periodic and Additional Information of the Lithuanian Securities Commission, we, Saulius
Jurgelenas, General Manager of public limited liability company SANITAS (hereinafter SANITAS) and Nerijus
Drobavicius, Chief Financial Officer of SANITAS hereby confirm that, to the best of our knowledge, the attached
consolidated and separate financial statements for the year ended 31 December 2010, prepared in accordance
with International Financial Reporting Standards, as adopted by the European Union, give a true and fair view
of the assets, liabilities, financial position and profit or loss of SANITAS group and SANITAS, and that the
consolidated annual report for the year ended 31 December 2010 gives a true and fair view about the business
development and activity of SANITAS group, together with a description of major risks and uncertainties.
General Manager
Saulius Jurgelenas
Chief Financial Officer
Nerijus Drobavicius
Public limited liability company SANITAS, Veiveriu str. 134B, LT-46352 Kaunas, Lithuania, tel. +370 37 22 67 25, fax +370 37 22 36 96,
sanitas@sanitasgroup.com, www.sanitasgroup.lt, company code 134136296, VAT code LT341362917,
registered in State Enterprise Centre of Registers, Register of Legal Persons of the Republic of Lithuania, Kaunas Branch (Gedimino str. 39A, Kaunas)
UAB Deloitte Lietuva

Jogailos g. 4
LT-01116 Vilnius
Lietuva
mons k.: 111525235
PVM mok. k.: LT115252314
Duomenys kaupiami ir saugomi
Juridini asmen registre
Tel.: +370 5 255 3000
Faks.: +370 5 212 6844
www.deloitte.lt
Independent auditors report

To the shareholders of SANITAS, AB:
Report on the Financial Statements
We have audited the accompanying financial statements of Sanitas, AB (thereafter the Company) and the consolidated
financial statements of SANITAS, AB and its subsidiaries (thereafter the Group) (pages 7 to 60), which comprise the
balance sheet and the consolidated balance sheet as of 31 December 2010, and the statements of comprehensive
income, statements of changes in equity and cash flow statements for the year then ended, and a summary of significant
accounting policies and other explanatory notes.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards as adopted by the EU, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements and the consolidated financial statements present fairly, in all material respects,
the financial position of the Company and the Group as of 31 December 2010, and their financial performance and their
cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the
EU.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 4 to the financial statements, disclosing the fact that as of 31
December 2010 the Companys current liabilities exceeded its current assets by LTL000 44,513. As further described in
Note 4 to the financial statements, the Companys ability to continue as a going concern primarily depends on the
managements abilities to use Group-wide cash management techniques to settle its short term liabilities as they fall due.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Deloitte yra vadinamos Deloitte Touche Tohmatsu Limited, Jungtins Karalysts ribotos atsakomybs bendrov,
ir grupei priklausanios bendrovs nars, kuri kiekviena yra atskiras ir nepriklausomas juridinis asmuo. Daugiau
informacijos apie oficiali Deloitte Touche Tohmatsu Limited struktr galite rasti www.deloitte.com/lt/apie.
Member of Deloitte Touche Tohmatsu
Report on Other Legal and Regulatory Requirements

Furthermore, we have read the accompanying Consolidated Annual Report for the year ended 31 December 2010
(pages 61 to 120) and have not noted any material inconsistencies between the historical financial information included
in it and the financial statements for the year ended 31 December 2010.
Simonas Rimaauskas
General Director, Auditor
Auditors Certificate No. 000466
Deloitte Lietuva UAB
Vilnius, Lithuania
7 March 2011
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
General Information
Board of Directors
Mr. Ashwin Roy (Chairman of the Board)
Mr. Martynas Cesnavicius
Mr. Tomas Nauseda
Mr. Martin Oxley
Mr. Darius Sulnis
Management
Mr. Saulius Jurgelenas (General Manager)
Mr. Nerijus Drobavicius (Chief Financial Officer)
Registered office and company code

Veiveriu str. 134 B,
LT-46352 Kaunas, Lithuania
Company code 1341 36296
Banks
Bank PEKAO S.A.
Bank Zachodni WBK S.A.
Danske Bank A/S Lithuania Branch
Deutsche Bank PBC S.A.
Dom Maklerski BZWBK
Fortis Bank Polska S.A.
Orszagos Takarekpenztar es Kereskedelmi Bank
PKO Bank Polski S.A.
Raiffeisenbank a.s.
SEB bankas, AB
Swedbank, AB
Tatra banka a.s.
Unikredit Bank sp. z o.o.
Unikredit Bulbank
Wniesztorgbank, OAO
Auditor
Deloitte Lietuva, UAB
Jogailos st. 4,
Vilnius, Lithuania
The financial statements were approved and signed by the management on 7 March 2011.
Management:
Mr. Saulius Jurgelenas

General Manager
Mr. Nerijus Drobavicius

According to the Law on Companies of the Republic of Lithuania, the annual financial statements are prepared by the Management and should be
approved by the General Shareholders meeting. The shareholders hold the power not to approve the annual financial statements and the right to request
new financial statements to be prepared.
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
all amounts are in thousand LTL unless otherwise stated
Statements of Comprehensive Income

Notes
Group
2010
2009
Company
2010
2009
Revenue
339,372
322,749
18,791
16,117
Cost of sales
(149,425)
(153,962)
(11,308)
(12,705)
Gross profit
189,947
168,787
7,483
3,412
Other income
3,603
4,981
3,619
15,445
Selling and distribution expenses
(82,310)
(80,455)
(3,541)
(2,923)
Regulatory affairs expenses
(11,227)
(11,106)
(851)
(946)
Research and development expenses
10
(1,958)
(1,901)
(126)
(308)
Administrative expenses
11
(29,292)
(35,954)
(9,408)
(10,383)
(2,459)
(3,729)
(55)
(293)
Other expenses
Operating profit (loss)
66,304
40,623
(2,879)
4,004
Finance income
12
20,984
7,835
3,771
148
Finance costs
12
(24,289)
(30,705)
(2,777)
(4,591)
62,999
17,753
(1,885)
(439)
Profit (loss) before tax

Income tax benefit (expense)
13
Profit (loss) for the period
(9,685)
91
44
(342)
53,314
17,844
(1,841)
(781)
1,954
707
Other comprehensive income (expense):

Exchange differences on translating
foreign operation
Cash flow hedges
27
6,302
1,246
Income tax (expense) relating to components of

other comprehensive income
27
(1,197)
(236)
7,059
1,717
60,373
19,561
(1,841)
(781)
1.71
0.57
Other comprehensive income

for the period, net of tax
Total comprehensive income (expense)
for the period, net of tax
Basic and diluted earnings per share
(in LTL)
14
The notes on pages 15 to 60 are an integral part of these financial statements.

Balance Sheets
Notes
Group
Company
As at 31
December
2010
As at 31
December
2009
As at 31
December
2010
As at 31
December
2009
ASSETS
Non-current assets
Property, plant and equipment
16
215,249
258,290
62,434
66,425
Intangible assets
17
304,199
292,831
1,425
913
Investments in subsidiaries
18
292,704
334,395
Other non-current financial assets
27
17
21
Deferred tax asset
13
23,548
27,851
2,726
2,435
543,013
578,993
359,289
404,168
35,609
42,242
5,149
3,359
170
128
76
6,623
Total non-current assets

Current assets
Inventories
19
Prepaid income tax

Trade receivables
20
55,372
61,454
9,613
Other receivables
21
2,492
4,689
2,219
73
2,230
2,353
226
152
Prepayments and deferred expenses

Other current financial assets
27
3,285
Cash and cash equivalents
22
2,475
3,417
119
177
98,348
117,568
17,326
10,460
641,361
696,561
376,615
414,628
Total current assets

Total assets
Contd on the next page

10
Balance Sheets (contd)

Notes
Group
As at 31
December
2010
As at 31
December
2009
Company
As at 31
December
2010
As at 31
December
2009
EQUITY AND LIABILITIES

Equity
Share capital
1, 23
31,106
31,106
31,106
31,106
Share premium
23
248,086
248,086
248,086
248,086
Legal reserve
24
3,111
3,111
3,111
3,111
Fair value reserve
24
(3,557)
(8,662)
Translation reserve
24
(3,370)
(5,324)
Retained earnings
103,076
49,762
17,884
19,725
Total equity
378,452
318,079
300,187
302,028
Non-current liabilities
Non-current loans
25
106,252
178,075
30,265
Finance lease obligations
26
2,119
1,787
57
281
Other non-current financial liabilities
27
3,562
Deferred tax liability
13
15,339
16,633
258
Deferred income from subsidies
28
14,274
15,098
14,274
15,098
Employee benefit liability
31
4,139
4,630
142,123
219,785
14,589
45,644
Total non-current liabilities

Current liabilities
Current portion of non-current loans
25
65,049
61,119
22,029
19,479
Current portion of non-current finance lease

obligations
26
1,254
3,025
223
523
Current loans
25
17,171
36,623
11,182
Trade payables
29
18,441
33,047
36,288
29,168
Advances received
255
717
97
Income tax payable
742
Other current financial liabilities
27
4,391
7,131
Other current liabilities
30
12,830
16,383
3,297
6,507
Employee benefit liability
31
467
486
Provisions
32
186
157
Total current liabilities
120,786
158,697
61,839
66,956
Total equity and liabilities
641,361
696,561
376,615
414,628

11
Statements of Changes in Equity

Group
Share
capital
Share
premium
Legal
reserve
Fair value
reserve
Translation
reserve
Retained
earnings
Total
31,106
248,086
3,111
(9,672)
(6,031)
31,918
298,518
Other comprehensive
income
1,010
707
1,717
Net profit for the year
17,844
17,844
Total income and

expense for the year
1,010
707
17,844
19,561
31,106
248,086
3,111
(8,662)
(5,324)
49,762
318,079
Other comprehensive
income
5,105
1,954
7,059
Net profit for the year
53,314
53,314
Total comprehensive
income for the year
5,105
1,954
53,314
60,373
31,106
248,086
3,111
(3,557)
(3,370)
103,076
378,452
Balance as at
1 January 2009
Balance as at
31 December 2009
Balance as at
31 December 2010
Company
Share capital
Share
premium
Legal
reserve
Retained
earnings
Total
31,106
248,086
3,111
20,506
302,809
Net (loss) for the year
(781)
(781)
Total (expense) for the year
(781)
(781)
31,106
248,086
3,111
19,725
302,028
Net (loss) for the year
(1,841)
(1,841)
Total (expense) for the year
(1,841)
(1,841)
31,106
248,086
3,111
17,884
300,187
Balance as at 1 January 2009
Balance as at
31 December 2009
Balance as at
31 December 2010

12
Cash Flow Statements

Notes
Group
Company
2010
2009
2010
2009
62,999
17,753
(1,885)
(439)
32,417
33,693
3,555
3,814
(65)
341
11
Cash flows from (to) operating activities

Profit (loss) before tax
Adjustments for non-cash items:
Depreciation and amortisation
16, 17, 28
Loss from disposal and write-off of

non-current assets
(Gain) from disposal HBM Pharma s.r.o.
12, 18
(14,487)
(3,770)
Change in value of financial instruments
12, 27
3,402
7,404
Change in allowance and write-off of trade

and other receivables
11
(1,738)
180
(84)
Change in allowance and write-off of

inventories
11
2,573
2,575
35
28
(3,392)
(4,884)
91
(147)
12,809
14,941
2,518
4,377
(19)
(42)
4,950
Unrealised foreign currency exchange

(gain) loss
Interest expenses
12
Interest (income)
12
Financial instruments settlement

Other non cash items
504
93
168
99,953
72,054
715
7,560
(4,452)
(1,787)
(1,825)
1,028
Decrease (increase) in trade and other

receivables and deferred charges
4,712
18,069
(7,467)
(17,432)
Increase in trade and other payables and

advances received
3,979
3,225
30,568
14,725
(634)
(604)
Income tax (paid) received
(7,404)
201
(728)
Net cash generated by operating

activities
96,154
91,158
21,263
5,881
(Acquisition) of property, plant and

equipment
(5,831)
(5,127)
(459)
(1,763)
(Acquisition) of non-current intangible

assets
(7,063)
(5,012)
(573)
140
432
19
(6,908)
Change in working capital:

(Increase) decrease in inventories
(Decrease) in employee benefits
31
Cash flows from (to) investing activities
Proceeds from sale of non-current assets

(Acquisition) of Laboratorium
Farmaceutyczne HOMEOFARM sp. z.o.o.,
net of cash acquired
(Settlement) of financial instruments
12
(4,950)
(669)
Proceeds from sale of HBM Pharma s.r.o.,

net of cash disposed
18
17,795
18,990
19
42
110
(17,242)
17,958
(1,744)
Interest received
Net cash generated by (used in)
investing activities
13
Cash Flow Statements (contd)

Notes
Group
Company
2010
2009
2010
2009
4,417
8,845
5,943
15,510
(82,799)
(63,530)
(38,043)
(16,241)
(2,824)
(3,884)
(524)
(991)
(12,448)
(14,493)
(3,103)
(2,193)
(3,552)
(76)
(3,552)
(76)
(97,206)
(73,138)
(39,279)
(3,991)
(942)
778
(58)
146
673
3,417
1,966
177
31
2,475
3,417
119
177
3,196
849
139
Cash flows from (to) financing activities

Proceeds from loans
(Repayments) of loans
(Payment) of finance lease liabilities
Interest (paid)
Dividends (paid)
15
Net cash (used in) financing activities

Net (decrease) increase in cash and cash
equivalents
Net foreign exchange difference
Cash and cash equivalents at the beginning
of the year
Cash and cash equivalents at the end
of the year
22
Supplemental information of cash flows:

Property, plant and equipment acquisition
financed by finance lease

14
Notes to the Financial Statements

1. General information
Public limited liability company SANITAS (hereinafter the Company) is a public limited liability company registered in
the Republic of Lithuania on 30 June 1994. The address of its registered office is as follows:
Veiveriu str. 134 B,
LT-46352 Kaunas, Lithuania.
The Company is involved in production and trade of generic medicines, namely injection preparations, tablets, capsules
and ointments. The Companys shares are listed in the Baltic Main List on AB NASDAQ OMX Vilnius, AB (previously
known as Vilnius Stock Exchange).
As at 31 December 2010 and 2009 the shareholders of the Company were:
2010
2009
Number of
shares held
(thousand)
Percentage
Number of
shares held
(thousand)
Percentage
Invalda, AB
8,254
26.54%
8,254
26.54%
Baltic Pharma Limited
6,315
20.30%
6,315
20.30%
Citigroup Venture Capital International Jersey Limited
5,461
17.56%
5,312
17.08%
Amber Trust II
4,003
12.87%
3,952
12.70%
Other
7,073
22.73%
7,273
23.38%
Total
31,106
100.00%
31,106
100.00%
The consolidated financial statements include the financial statements of public limited liability company SANITAS and
the subsidiaries listed in the following table (hereinafter the Group):
Name
Main activities
Country of
incorporation
Jelfa SA
Production and trade of medicines
Poland
HBM Pharma s.r.o.
Slovakia
Pharmaceutical Laboratory
HOMEOFARM Sp. z o.o.
Sanitas Pharma a.s.
Marketing, sales and regulatory

affairs services
% of equity interest
2010
2009
100
100
100
Poland
100
100
Czech Republic
100
On 17 May 2010 HBM Pharma s.r.o established a new subsidiary Sanitas Pharma a.s. Marketing, sales and regulatory
affairs activities located in Bratislava and Prague were separated from HBM Pharma s.r.o. and transferred to the newly
established subsidiary. On 17 June Sanitas Pharma a.s. was sold to the other Group company Jelfa SA. These changes
were performed due to the fact, that in July HBM Pharma s.r.o. was sold to Latvian company SIA Liplats 2000 (Note 12,
Note 18).
As at 31 December 2010 the number of Group employees was 1,108 (as at 31 December 2009 1,372). As at
31 December 2010 the number of Company employees was 130 (as at 31 December 2009 131).
The financial statements were approved and signed by the Management on 7 March 2011.
According to the Law on Companies of the Republic of Lithuania, the annual financial statements are prepared by the
Management and should be approved by the General Shareholders meeting. The shareholders hold the power not to
approve the annual financial statements and the right to request new financial statements to be prepared.

15
2. Application of new and revised International Financial Reporting Standards

2.1. Standards and Interpretations effective in the current period
The following amendments to the existing International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) and adopted by the European Union (hereinafter the EU) are effective for the
current period:
IFRS 1 (revised) First-time Adoption of IFRS adopted by the EU on 25 November 2009 (effective for annual
periods beginning on or after 1 January 2010);
Amendments to IFRS 1 First-time Adoption of IFRS- Additional Exemptions for First-time Adopters, adopted by
the EU on 23 June 2010 (effective for annual periods beginning on or after 1 January 2010);
Amendments to IFRS 2 Share-based Payment - Group cash-settled share-based payment transactions adopted
by the EU on 23 March 2010 (effective for annual periods beginning on or after 1 January 2010);
Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Eligible hedged items, adopted by
the EU on 15 September 2009 (effective for annual periods beginning on or after 1 July 2009);
Amendments to various standards and interpretations Improvements to IFRSs (2009) resulting from the annual
improvement project of IFRS published on 16 April 2009, adopted by the EU on 23 March 2010 (IFRS 2, IFRS 5,
IFRS 8, IAS 1, IAS 7, IAS 17, IAS 18, IAS 36, IAS 38, IAS 39, IFRIC 9 and IFRIC 16) primarily with a view to
removing inconsistencies and clarifying wording, adopted by the EU on 23 March 2010 (effective for annual periods
beginning on or after 1 January 2010);
IFRIC 12 Service Concession Arrangements adopted by the EU on 25 March 2009 (effective for annual periods
beginning on or after 30 March 2009);
IFRIC 15 Agreements for the Construction of Real Estate adopted by the EU on 22 July 2009 (effective for annual
IFRIC 16 Hedges of a Net Investment in a Foreign Operation adopted by the EU on 4 June 2009 (effective for
annual periods beginning on or after 1 July 2009);
IFRIC 17 Distributions of Non-Cash Assets to Owners adopted by the EU on 26 November 2009 (effective for
annual periods beginning on or after 1 November 2009);
IFRIC 18 Transfers of Assets from Customers adopted by the EU on 27 November 2009 (effective for annual
periods beginning on or after 1 November 2009).
The adoption of these amendments to the existing standards has not led to any changes in the Group accounting
policies.
The Group early adopted in 2009 the following amendments, effective in the current period:
IFRS 3 (revised) Business Combinations adopted by the EU on 3 June 2009 (effective for annual periods
beginning on or after 1 July 2009);
Amendments to IAS 27 Consolidated and Separate Financial Statements adopted by the EU on 3 June 2009
(effective for annual periods beginning on or after 1 July 2009).
2.2. Standards and Interpretations issued by the IASB and adopted by the EU but not yet effective
At the date of authorisation of these financial statements the following standards, revisions and interpretations adopted
by the EU were in issue but not yet effective and the Group has elected not to adopt these standards, revisions and
interpretation in advance of their effective dates:
IAS 24 Related party disclosures (revised in 2009) modifies the definition of a related party and simplifies
disclosures for government-related entities (effective for annual periods beginning on or after 1 January 2011). The
Group does not expect any impact on its financial position or performance as the Group is not a government-related
entity;
Amendments to IAS 32 Financial Instruments: Presentation Classification of Rights Issues (effective for annual
periods beginning on or after 1 February 2010) address the classification of certain rights issues denominated in a
foreign currency as either an equity instrument or as a financial liability. To date, the Group has not entered into any
arrangements that would fall within the scope of the amendments. However, if the Group does enter into any rights
issues within the scope of the amendments in future accounting periods, the amendments to IAS 32 will have an
impact on the classification of those rights issues;
Amendments to IFRS 1 First-time Adoption of IFRS- Limited Exemption from Comparative IFRS 7 Disclosures for
First-time Adopters (effective for annual periods beginning on or after 1 July 2010). The Group does not expect any
impact on its financial position or performance from these amendments;

16
Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement provides guidance on assessing

the recoverable amount of a net pension asset (effective for annual periods beginning on or after 1 January 2011).
The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The
amendment is deemed to have no impact on the financial statements of the Group;
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments provides guidance regarding the accounting
for the extinguishment of a financial liability by the issue of equity instruments (effective for annual periods
beginning on or after 1 July 2010). To date, the Group has not entered into transactions of this nature. However, if
the Group does enter into any such transactions in the future, IFRIC 19 will affect the required accounting. In
particular, under IFRIC 19, equity instruments issued under such arrangements will be measured at their fair value,
and any difference between the carrying amount of the financial liability extinguished and the fair value of equity
instruments issued will be recognised in profit or loss.
2.3. Standards and Interpretations issued by the IASB but not yet adopted by the EU
At present, IFRSs as adopted by the EU do not significantly differ from regulations adopted by IASB except from the
following standards, amendments to the existing standards and interpretations, which were not endorsed for use as at
7 March 2011:
Amendments to IFRS 1 First-time Adoption of IFRS Severe Hyperinflation and Removal of Fixed Dates for Firsttime Adopters (effective for annual periods beginning on or after 1 July 2011);
Amendments to IFRS 7 Financial Instruments: Disclosures Transfers of Financial Assets (effective for annual
periods beginning on or after 1 July 2011);
IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2013);
Amendments to IAS 12 Income Taxes Deferred Tax: Recovery of Underlying Assets (effective for annual
Amendments to various standards and interpretations Improvements to IFRSs (2010) resulting from the annual
improvement project of IFRS published on 6 May 2010 (IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 34, IFRIC 13)
primarily with a view to removing inconsistencies and clarifying wording (most amendments are to be applied for
annual periods beginning on or after 1 January 2011).
The Group management anticipates that the adoption of these standards, amendments to the existing standards and
interpretations will have no material impact on the financial statements of the Group in the period of initial application.
At the same time, hedge accounting regarding the portfolio of financial assets and liabilities, whose principles have not
been adopted by EU, is still unregulated. According to the Group's estimates, application of hedge accounting for the
portfolio of financial assets or liabilities pursuant to IAS 39" Financial Instruments: Recognitions and Measurement",
would not significantly impact the financial statements, if applied as at the balance sheet date.
3. Accounting principles
3.1. Statement of compliance
The financial statements of the Group and the Company have been prepared in accordance with IFRS as adopted by
the EU.
3.2. Basis of preparation
These financial statements have been prepared on a historical cost basis except for derivative financial instruments that
have been measured at fair value. Historical cost is generally based on the fair value of the consideration given in
exchange for assets.
The principal accounting policies adopted in preparing the consolidated and the separate financial statements for the
year ended 31 December 2010 are set out below.
3.3. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and
expenses are eliminated in full on consolidation.

17
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous
carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.
Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e.
reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the
relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the
date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39
Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment
in an associate or jointly controlled entity.
Foreign currency translation
The Groups and Separate financial statements are presented in local currency of the Republic of Lithuania, Litas (LTL),
which is the Companys functional and the Groups and the Companys presentation currency. Each entity in the Group
determines its own functional currency and items included in the financial statements of each entity are measured using
that functional currency. Transactions in foreign currencies are initially recorded at the functional currency ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the balance sheet date. All differences are taken to profit or loss. Non
monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was determined. Any goodwill arising on the
acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising
on the acquisition are treated as assets and liabilities of the foreign operation and translated at the balance sheet date
rate.
The functional currency of the foreign operations in Polish subsidiaries Jelfa SA and Pharmaceutical Laboratory
HOMEOFARM Sp. z o.o and Slovak subsidiary Sanitas Pharma a.s. and ex-subsidiary HBM Pharma s.r.o. are Polish
Zloty (PLN) and euro (EUR), respectively. As at the reporting date, the assets and liabilities of these subsidiaries are
translated into the presentation currency of the Company (LTL) at the rate of exchange ruling at the balance sheet date
and their statements of comprehensive income are translated at the weighted average exchange rates for the year. The
exchange differences arising on the translation are recognised in other comprehensive income and accumulated in
equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular
foreign operation is recognised in the profit or loss.
Lithuanian Litas is pegged to EUR at the rate of 3.4528 Litas for 1 EUR, and the exchange rates in relation to other
currencies are set daily by the Bank of Lithuania.
3.4. Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs
are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent
consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are
adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other
subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in
accordance with relevant IFRS. Changes in the fair value of contingent consideration classified as equity are not
recognised.
Where a business combination is achieved in stages, the Groups previously held interests in the acquired entity are
remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if
any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would
be appropriate if that interest were disposed of.

18
The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS
3 are recognised at their fair value at the acquisition date, except that:
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised
and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
liabilities or equity instruments related to the replacement by the Group of an acquirees share-based payment
awards are measured in accordance with IFRS 2 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are
recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that,
if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.
Business combinations that took place prior 1 January 2009 were accounted for in accordance with the previous version
of IFRS 3.
3.5. Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition
date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirers previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Groups interest in the fair value of the acquirees identifiable net assets exceeds the sum of
the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the
acquirers previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as
a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing,
goodwill is allocated to each of the Groups cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating
unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in
the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on
disposal.
3.6. Investments in subsidiaries
Investments in subsidiaries in the Company's separate financial statements are shown at cost less impairment. An
assessment of whether any indication of impairment exists is performed at least annually.
3.7. Property, plant and equipment
Property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated
depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of such property,
plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. Replaced
parts are written-off. All other repair and maintenance costs are recognised in profit or loss as incurred.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset
is derecognised.
19
Depreciation is calculated on a straight-line basis over the useful life of the assets as follows:
Buildings
Machinery and equipment
Vehicles and other non-current assets
10 40 years
3 25 years
2 10 years
The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end, and
adjusted prospectively if appropriate.
Construction in progress is stated at cost. This includes the cost of construction and equipment and other directly
attributable costs. Construction in progress is not depreciated until the relevant assets are completed and are available
for their intended use.
3.8. Intangible assets other than goodwill
Intangible assets are measured initially at cost. Intangible assets are recognised if it is probable that future economic
benefits that are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. After
initial recognition, intangible assets are measured at cost less accumulated amortisation and any accumulated
impairment losses. The useful lives of intangible assets other than goodwill are assessed to be finite. Intangible assets
are amortised on a straight-line basis over the best estimate of their useful lives.
Gain or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
Research and development costs
Research costs are expensed as incurred. Development expenditure on an individual projects is recognised as an
intangible asset when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will
be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate
future economic benefits, the availability of resources to complete the asset and the ability to measure reliably the
expenditure during development.
Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to
be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset
begins when development is complete and the asset is available for use. It is amortised in 5 years. During the period of
development, the asset is tested for impairment annually.
Software
The costs of acquisition of new software are capitalised and treated as an intangible asset if these costs are not an
integral part of the related hardware. Software is amortised during 2 15 years.
Costs incurred in order to restore or maintain the future economic benefits that the Group and the Company expect from
the originally assessed standard of performance of existing software systems are recognised as an expense when the
restoration or maintenance work is carried out.
Licences
The licences have been granted for a period from 2 to 10 years by the relevant government agency with the option of
renewal at the end of this period. The licences are amortised on a straight line basis over the period of license. The
licences provide the option for renewal based on whether the Group meets the conditions of the licence and may be
renewed at little or no cost to the Group. If the license term is prolonged, the amortisation period is revised.
3.9. Impairment of non-financial assets, excluding goodwill
At the end of each reporting period, the Group and the Company reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
and the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cashgenerating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable
and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired.
20
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the
relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a
revaluation increase.
3.10. Investments and other financial assets
Financial assets within the scope of IAS 39 are classified as either financial assets at fair value through profit or loss,
loans and receivables, held to maturity investments, available for sale financial assets, or as derivatives designated as
hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets
at initial recognition.
Financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or
loss, directly attributable transaction costs.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the marketplace (regular way purchase) are recognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset.
The Groups financial assets include cash, trade and other receivables, loans and other receivables and derivative
financial instruments.
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets
designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if
they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments
entered into by the Group that do not meet the hedge accounting criteria as defined by IAS 39. Financial assets at fair
value through profit or loss are carried in the balance sheet at fair value with the gains or losses recognised in profit or
loss.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets which carry fixed or determinable payments and fixed
maturities and which the Group has the positive intention and ability to hold to maturity. After initial measurement held to
maturity investments are measured at amortised cost. This cost is computed as the amount initially recognised minus
principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference
between the initially recognised amount and the maturity amount, less allowance for impairment. This calculation
includes all fees and points paid or received between parties to the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums and discounts. Gains and losses are recognised in profit or loss
when the investments are derecognised or impaired, as well as through the amortisation process. The Group and the
Company did not have any held-to-maturity investments during the years ended 31 December 2010 and 2009.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial recognition, such financial assets are carried at amortised cost using the effective interest rate
method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on
acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and
losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through
the amortisation process.
21
Available-for-sale financial instruments

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or
are not classified in any of the three preceding categories. After initial measurement, available for sale financial assets
are measured at fair value with unrealised gains or losses being recognised in other comprehensive income and
accumulated in the investments revaluation reserve. When the investment is disposed of, the cumulative gain or loss
previously accumulated in the investments revaluation reserve is reclassified to profit or loss. Interest earned or paid on
the investments is reported as interest income or expense using the effective interest rate. Dividends earned on
investments are recognised in profit or loss as Dividends received when the right of payment has been established.
The Group and the Company did not have any available-for-sale investments during the years ended 31 December 2010
and 2009.
3.11. Impairment of financial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group
of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if,
there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition
of the asset (an incurred loss event) and that loss event has an impact on the estimated future cash flows of the
financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in
interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where
observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults.
Assets carried at amortised cost
For amounts due from loans and amounts due from other parties carried at amortised cost, the Group and the Company
first assesses individually whether objective evidence of impairment exists for financial assets that are individually
significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective
evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset
in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets
that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not
included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the
difference between the assets carrying amount and the present value of estimated future cash flows (excluding future
expected credit losses that have not been incurred). The carrying amount of the asset is reduced through the use of an
allowance account and the amount of the loss is recognised in profit or loss. If, in a subsequent year, the amount of the
estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised,
the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future writeoff is later recovered, the recovery is recognised in profit or loss.
The present value of the estimated future cash flows is discounted at the financial assets original effective interest rate.
If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest
rate.
Available-for-sale financial investments
If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal
payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is
transferred from cumulative gains or losses previously recognised in other comprehensive income to profit or loss.
Reversals in respect of equity instruments classified as available for sale are not recognised in profit or loss. Any
increase in fair value subsequent to an impairment loss is recognised in other comprehensive income. Reversals of
impairment losses on debt instruments are reversed through profit or loss; if the increase in fair value of the instrument
can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.
3.12. Inventories
Inventories are valued at the lower of cost or net realisable value. Net realisable value is the selling price in the ordinary
course of business, less the costs of completion, marketing and distribution. Cost is determined by the first-in, first-out
(FIFO) method. The cost of finished goods and work in progress includes the applicable allocation of fixed and variable
production costs based on a normal operating capacity. Unrealisable inventories are fully written-off.

22
3.13. Cash and cash equivalents

Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an
insignificant risk of change in value.
For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank
account as well as deposits in bank with original term of three months or less.
3.14. Financial liabilities
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans
and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group
determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair
value and in the case of loans and borrowings, plus directly attributable transaction costs.
The Groups financial liabilities include trade and other payables, bank overdraft, loans and borrowings, finance lease
liabilities, and derivative financial instruments.
The measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial
instruments entered into by the Group that do not meet the hedge accounting criteria as defined by IAS 39. Gains or
losses on liabilities held for trading are recognised in profit and loss. The Group has not designated any financial
liabilities as at fair value through profit or loss during the years ended 31 December 2010 and 2009.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as
well as through the amortisation process. The borrowings are classified as non-current if the financing agreement as at
the balance sheet date provides evidence that the substance of the liability at the balance sheet date was long-term.
3.15. Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at
inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset.
Group as a lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased
item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value
of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the
lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
reflected in profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if
there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term.

23
3.16. Derecognition of financial assets and liabilities

Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is
derecognised when:
the rights to receive cash flows from the asset have expired;
the Group and the Company have transferred their rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a pass-through
arrangement; and either (a) have transferred substantially all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the
asset.
When the Group and the Company have transferred their rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset
is recognised to the extent of the Group's and the Companys continuing involvement in the asset.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of
the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in profit or loss.
3.17. Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments such as currency exchange option contracts and interest rate swaps to
hedge its foreign exchange risks and interest rate risks respectively. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at
fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the
fair value is negative.
Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge
accounting and the ineffective portion of an effective hedge, are taken directly to profit or loss.
The fair value of currency exchange option contracts is the sum of the difference between the option exchange rate and
the contract rate and the time value. The option exchange rate is referenced to current option exchange rates for
contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market
values for similar instruments.
For the purpose of hedge accounting, hedges are classified as:
fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an
unrecognised firm commitment (except for foreign currency risk); or
cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk
in an unrecognised firm commitment; or
hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which
the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the
risk being hedged and how the entity will assess the hedging instruments effectiveness in offsetting the exposure to
changes in the hedged items fair value or cash flows attributable to the hedged risk. Such hedges are expected to be
highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to
determine that they actually have been highly effective throughout the financial reporting periods for which they were
designated.

24
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income, while
any ineffective portion is recognised immediately in profit or loss.
Amounts previously recognised in other comprehensive income and accumulated in equity are transferred to profit or
loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is
recognised or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial
liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously accumulated in equity are transferred to
profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its
designation as a hedge is revoked, amounts previously accumulated in equity remain in equity until the forecast
transaction occurs.
The Group has an interest rate swap that is used as a hedge for the exposure to the changes in the variable interest rate
of Jelfa SA loans. See Note 27 for more details.
Current versus non-current classification
Derivative instruments that are not a designated and effective hedging instrument are classified as current or non-current
or separated into a current and non-current portion based on an assessment of the facts and circumstances (i.e., the
underlying contracted cash flows):
where the Group will hold a derivative as an economic hedge (and does not apply hedge accounting), for a period
beyond 12 months after the balance sheet date, the derivative is classified as non-current or separated into current
and non-current portions) consistent with the classification of the underlying item;
embedded derivates that are not closely related to the host contract are classified consistent with the cash flows of
the host contract;
derivative instruments that are designated as, and are effective hedging instruments, are classified consistent with
the classification of the underlying hedged item. The derivative instrument is separated into a current portion and
non-current portion only if a reliable allocation can be made.
3.18. Grants
Grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions
will be complied with. When the grant relates to an expense item, it is recognised as income over the period necessary to
match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset,
it is recognised as deferred income and released to profit or loss in equal amounts over the expected useful life of the
related asset. In profit or loss, depreciation expense account is decreased by the amount of grant amortisation.
3.19. Employee benefits
Jelfa SA pays retirement benefits and jubilee bonuses for its employees. The amount of the liability due to these benefits
is equal to the present value of the defined benefit obligation at the balance sheet date, and reflect actuarial gains and
losses and the costs of past employment. The value of defined benefit obligations is estimated at the balance sheet date
by independent actuaries using the Projected Unit Credit Method. The present value of the defined benefit obligation is
determined by discounting estimated future cash outflow using the interest rates on treasury bonds expressed in the
currency of future benefit payment, with maturities similar to those of the liabilities due to be paid.
Actuarial gains and losses increase or decrease costs recognised in profit or loss in the period in which they arose.
Costs of past employment related to defined benefit plans are accounted for in profit or loss systematically, using the
straight-line method, over the period until the benefits become vested.
3.20. Provisions
Provisions are recognised when the Group and the Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a
provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate
asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or
loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a
current pre tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the
increase in the provision due to the passage of time is recognised as a finance cost.
25
3.21. Contingencies
Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an
outflow of resources embodying economic benefits is remote.
A contingent asset is not recognised in the financial statements.
3.22. Current and deferred income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted by the balance sheet date. Current income tax relating to items that are recognised
outside profit or loss (whether in other comprehensive income or directly in equity) is also recognised outside profit or
loss. Income tax charge is based on profit for the year and considers deferred taxation. Income tax is calculated based
on the respective countrys tax legislation.
The income tax rate in Lithuania was 20% in 2009. Since 1 January 2010 income tax rate was decreased to 15%. Tax
losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities
and/or derivative financial instruments in Lithuania. Such carrying forward is disrupted if the Company changes its
activities due to which these losses incurred except when the Company does not continue its activities due to reasons
which do not depend on Company itself. The losses from disposal of securities and/or derivative financial instruments
can be carried forward for 5 consecutive years and only be used to reduce the taxable income earned from the
transactions of the same nature.
The standard income tax rate in Poland and in Slovakia is 19%. According to Polish legislation tax losses may be carried
forward for 5 consecutive years. Up to half of the original loss may be deducted in any year of the 5 year period. In
Slovakia each years tax loss should be considered separately and can be carried forward over five consecutive tax
periods.
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
where the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax
assets are recognised only to the extent that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax
asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date.

26
Deferred income tax relating to items that are recognised outside profit or loss (whether in other comprehensive income
or directly in equity), is also recognised outside profit or loss.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity
and the same taxation authority.
3.23. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the year.
3.24. Dividends distribution
Dividends distribution to the Companys shareholders is recognised as a liability in the Groups and the separate financial
statements at the moment they are declared by the Annual General Shareholders Meeting.
3.25. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow
to the Group and the Company and the amount of the revenue can be measured reliably. Revenue is measured at the
fair value of the consideration received, excluding discounts, rebates, and other sales taxes or duty. The following
specific recognition criteria must also be met before the revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have
passed to the buyer.
Interest income
Revenue is recognised as interest accrues (using the effective interest method). Interest income is included in the
finance revenue in profit or loss.
Dividends
Revenue is recognised when the Groups right to receive the payment is established.
3.26. Borrowing costs
Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying
asset. Capitalisation of borrowing costs commences when the activities to prepare the asset are in progress and
expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially ready
for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is
recorded.
3.27. Operating segments
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 requires operating
segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by
the chief operating decision maker in order to allocate resources to the segments and to assess their performance. In
contrast, the predecessor Standard (IAS 14 Segment Reporting) required an entity to identify two sets of segments
(business and geographical), using a risks and returns approach, with the entitys system of internal financial reporting to
key management personnel serving only as the starting point for the identification of such segments. Following the
adoption of IFRS 8, the identification of the Groups reportable segments has not changed significantly.
3.28. Significant accounting judgments, estimates and assumptions
The preparation of the financial statements requires management of the Group and the Company to make judgments,
estimates and assumptions that affects the reported amounts of revenues, expenses, assets and liabilities and
disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates
could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected
in the future. The significant areas of estimation used in the preparation of these financial statements are discussed
below.

27
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the 'value
in use' of the cash-generating units to which the goodwill is allocated. Estimating the value in use amount requires
management to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a
suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at
31 December 2010 was LTL 265,300 thousand (as at 31 December 2009 - LTL 254,269 thousand) (further details are
given in Note 17).
Impairment loss of accounts receivable
The impairment loss of accounts receivable was determined based on managements estimates on recoverability and
timing relating to the amounts that will not be collectable according to the original terms of receivables. These accounting
estimates require significant judgment. Judgment is exercised based on significant financial difficulties of the debtor,
probability that the debtor will enter into bankruptcy or financial reorganisation, and default or delinquency in payments.
Current estimates could change significantly as a result of change in situation in the market and the economy as a
whole. Recoverability rate also highly depends on success rate and actions employed relating to recovery of significantly
overdue accounts receivable. Carrying amounts of receivables are disclosed in Notes 20 and 21.
Impairment of non-financial assets
The Group and the Company assesses whether there are any indicators of impairment for all non-financial assets at
each reporting date. Non-financial assets are tested for impairment when there are indicators that the carrying amounts
may not be recoverable. When value in use calculations are undertaken, management must estimate the expected future
cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present
value of those cash flows. The impairment of the Companys property plant and equipment was based on the
assumption that the manufacturing plant is operating with the contracts, which gives the minimum profitability.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgment is required to determine the amount
of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together
with future tax planning strategies. The carrying value of recognised tax losses at 31 December 2010 for the Group was
LTL 6,336 thousand (as at 31 December 2009 LTL 9,470 thousand).
Useful life of property, plant and equipment
The key assumptions concerning determination of the useful life of property, plant and equipment are as follows:
expected usage of the asset, expected physical wear and tear, technical or commercial obsolescence arising from
changes or improvements in the services, legal or similar limits on the use of the asset, such as the expiry dates of
related leases.
3.29. Comparative figures
Where necessary, the comparative figures have been adjusted to conform to changes in presentation in the current year.

28
4. Going concern
The financial statements for the year ended 31 December 2010 are prepared under the assumption that the Group and
the Company will continue as a going concern.
In 2010 the Company incurred net losses of LTL 1,841 thousand (net losses of LTL 781 thousand in 2009) and the
Companys liquidity (total current assets/total current liabilities) and quick ratios ((total current assets-inventories)/total
current liabilities) as at 31 December 2010 were 0.28 and 0.20 (0.16 and 0.11 as at 31 December 2009, respectively).
Low liquidity ratios were mainly caused by LTL 16,177 thousand long term loan portion presentation as short term
Company liability, as the company did not comply with the covenants set out in the loan agreement with Swedbank, AB
(Note 25). The Group management has informed Swedbank, AB about this situation and prepares to renegotiate the
terms of this long term loan agreement in the nearest future.
The management of the Company prepared a forecast of the Companys and Groups operations for 2011, showing that
the forecasted 2011 cash flow from ordinary operations is sufficient to fully service the scheduled non-current and current
loans repayments that fall due in 2011 at the Group level. Therefore the repayment of the Companys loans which fall
due is also feasible, exercising Group-wide cash management techniques.
Finally, cash flow is managed at a Group level (Note 34) and is closely monitored by the Group management. This
ensures secure service of all the Group companies liabilities to third parties.
Taking into account the above facts, the management of the Company concludes that the Group and the Company will
continue as a going concern through 2011 and the following years.
5. Segment information
For management purposes, the Group is organised into business units on their products, and has four reportable
operating segments: injectables, tablets, ointments and eye drops and pre-filled syringes. Management monitors the
operating results of its business units separately for the purpose of making decisions about resource allocation and
performance assessment.
The accounting policies of the reportable segments are the same as the Groups accounting policies described in Note 3.
Operating expenses, which are directly related to the operating segments, are allocated to the particular segments.
Other operating expenses, related to the ordinary activities are indirectly allocated to the operating segments pro rata
production volumes in the period. One-off operating expenses are not allocated to the segments. Financial activities and
income taxes are managed on a Group level and are not allocated to the operating segments as well. This is the
measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance.
For the purposes of monitoring segment performance and allocating resources between segments:
all assets are allocated to reportable segments other than investments in subsidiaries, other financial assets and
tax assets. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by
individual reportable segments;
all liabilities are allocated to reportable segments other than other financial liabilities, loans, current and deferred tax
liabilities, and other liabilities. Liabilities for which reportable segments are jointly liable are allocated in proportion to
segment assets.

29
Group information by operating segments for the year ended 31 December 2010 and 2009 is as follows:
Group
Injectables
Tablets
Ointments
Eye drops, syringes
Unallocated
Total
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
32,388
41,494
17,991
27,860
565
1,592
110
112
51,054
71,058
Own products sales
39,431
40,504
107,799
92,909
133,839
113,544
2,248
45
5,001
4,689
288,318
251,691
Total revenue
71,819
81,998
125,790
120,769
134,404
115,136
2,358
45
5,001
4,801
339,372
322,749
Segment gross profit (loss)
23,173
27,840
63,928
58,398
101,210
81,261
458
(574)
1,178
1,862
189,947
168,787
Toll manufacturing sales
Other activity, net
1,144
1,252
1,144
1,252
(22,873)
(25,486)
(52,655)
(57,698)
(42,217)
(40,417)
(1,700)
(78)
(5,342)
(5,737)
(124,787)
(129,416)

before financing costs
300
2,354
11,273
700
58,993
40,844
(1,242)
(652)
(3,020)
(2,623)
66,304
40,623
Financial expenses, net
(3,305)
(22,870)
(3,305)
(22,870)
300
2,354
11,273
700
58,993
40,844
(1,242)
(652)
(6,325)
(25,493)
62,999
17,753
Operating expenses
Profit (loss) before taxes

Income tax
(9,685)
91
(9,685)
91
300
2,354
11,273
700
58,993
40,844
(1,242)
(652)
(16,010)
(25,402)
53,314
17,844
Segment assets
94,094
110,728
195,803
207,017
205,474
198,209
13,943
13,976
132,047
166,631
641,361
696,561
Goodwill (Note 17)
39,911
38,251
84,872
81,343
140,517
134,675
265,300
254,269
Segment liability
29,577
22,183
10,938
26,167
8,228
8,447
5,070
4,872
209,096
316,813
262,909
378,482
Acquisition of non-current
assets
2,183
1,587
3,428
2,390
1,657
581
37
7,840
4,197
15,110
8,792
5,320
6,378
10,102
8,644
5,214
3,827
463
413
12,142
15,225
33,241
34,487
Grant amortisation
(167)
(162)
(152)
(152)
(129)
(107)
(376)
(373)
(824)
(794)
Segment profit (loss)
Unallocated sales mainly include sales of syrups and suspensions, which cannot be attributed to the other segments. Revenue reported above represents revenue generated from
external customers. There were no intersegment sales in the year 2010 and 2009.
Toll manufacturing sales decreased due to the sale of the subsidiary HBM Pharma s.r.o. This entity manufacturing plant was mainly generating toll manufacturing sales for the Group
and was sold at the beginning of the second half of 2010 (Note 12).
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2010
30
Company information by operating segments for the years ended 31 December 2010 and 2009 is as follows:
Company
Injectables
Toll manufacturing sales
Own products sales
Total revenue
Segment gross profit (loss)
Tablets
Ointments
Eye drops, syringes
Unallocated
Total
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2,639
1,928
501
110
3,250
1,928
7,492
7,771
5,553
4,537
1,771
1,836
708
45
17
15,541
14,189
10,131
9,699
6,054
4,537
1,771
1,836
818
45
17
18,791
16,117
5,123
1,680
1,896
1,136
817
1,179
(333)
(574)
(20)
(9)
7,483
3,412
Other activity, net
3,564
15,152
3,564
15,152
Operating expenses
(8,575)
(9,151)
(4,185)
(4,400)
(395)
(406)
(691)
(78)
(80)
(525)
(13,926)
(14,560)

before financing costs
(3,452)
(7,471)
(2,289)
(3,264)
422
773
(1,024)
(652)
3,464
14,618
(2,879)
4,004
Financial expenses, net
994
(4,443)
994
(4,443)
(3,452)
(7,471)
(2,289)
(3,264)
422
773
(1,024)
(652)
4,458
10,175
(1,885)
(439)
44
(342)
44
(342)
Segment profit (loss)
(3,452)
(7,471)
(2,289)
(3,264)
422
773
(1,024)
(652)
4,502
9,833
(1,841)
(781)
Segment assets
19,688
14,971
20,926
20,574
1,403
755
14,194
14,080
320,404
364,248
376,615
414,628
Segment liability
26,639
8,258
5,355
4,124
1,609
118
5,070
4,964
37,755
95,136
76,428
112,600
Acquisition of non-current
assets
258
26
148
11
37
495
333
903
407
989
1,141
1,027
1,007
463
413
1,900
2,047
4,379
4,608
(167)
(162)
(152)
(152)
(129)
(107)
(376)
(373)
(824)
(794)
Profit (loss) before taxes

Income tax
Grant amortisation

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2010
31
The Groups revenue from external customers and information about its non-current tangible and intangible assets by
geographical location as at 31 December 2010 and 2009 is detailed below:
Group
Toll manufacturing
sales
Poland
Own products sales
Total revenue
Total non-current
tangible and
intangible assets
2010
2009
2010
2009
2010
2009
2010
2009
860
2,979
173,200
150,439
174,060
153,418
455,551
448,205
-
Russia
54,061
47,162
54,061
47,162
25,728
22,902
702
482
26,430
23,384
14,612
13,054
14,612
13,054
63,787
67,259
Slovakia
7,341
17,530
6,125
5,373
13,466
22,903
110
35,657
Germany
11,743
22,332
11,743
22,332
Latvia
Lithuania
Ukraine
9,973
7,997
9,973
7,997
1,112
1,174
7,532
6,588
8,644
7,762
Georgia
5,109
5,443
5,109
5,443
Hungary
1,889
2,179
3,157
3,513
5,046
5,692
Bulgaria
3,589
3,184
3,589
3,184
Kazakhstan
3,540
2,682
3,540
2,682
Vietnam
2,408
2,974
2,408
2,974
Belarus
1,992
1,618
1,992
1,618
Switzerland
1,737
1,425
1,737
1,425
Uzbekistan
917
406
917
406
Moldova
460
466
460
466
Kyrgyzstan
314
237
314
237
210
221
210
221
Czech Republic
Great Britain
USA
Unallocated
Total
434
51,054
169
169
147
71,058
627
288,318
73
251,691
1,061
339,372
220
322,749
519,448
551,121
The top 3 customers, which contributed more than 10% to the Group sales, amounted to 39% of total Group sales in
2010. In 2009, the top 3 customers, which contributed more than 10% to the Group sales, amounted to 33% of total
Group sales.
More details about own products sales are presented in the Consolidated Annual Report, paragraph 24.7. Sales and
products distribution.
Company
Toll manufacturing
sales
2010
Lithuania
Latvia
Germany
Poland
Total
Own products sales
Total revenue
Total non-current
assets
2009
2010
2009
2010
2009
2010
2009
14,612
13,054
14,612
13,054
63,859
67,338
2,639
1,928
702
482
3,341
2,410
611
611
3,250
1,928
227
15,541
653
14,189
227
18,791
653
16,117
63,859
67,338
In 2010 the Company started to sell tablets and eye drops for new toll manufacturing contracts in Germany.
The top 5 customers, which contributed more than 10% to the Company sales, amounted to 71% of total Company sales
in 2010. In 2009, the top 3 customers, which contributed more than 10% to the Company sales, amounted to 57% of
total Company sales.

32
6. Cost of sales
Employee benefit expenses amounting to LTL 37,096 thousand and LTL 1,223 thousand for the year 2010 (LTL 41,359
thousand and LTL 2,093 thousand for the year 2009) have been included into the cost of sales in the Groups and the
Companys statements of comprehensive income, respectively.
7. Other income
Group
Company
2010
2009
2010
2009
2,634
4,210
3,579
15,289
Income from current assets sales
734
493
40
156
Out licence income
208
278
Rent and services
Gain on disposal of tangible non-current assets
27
3,603
4,981
3,619
15,445
The decrease in the other Company income relates to the management consulting services income accounted for in the
year ended 31 December 2009 which related to the period 2006 2009 in the amount of LTL 15,021 thousand. The
management consulting services income in 2010 amounted to LTL 3,445 thousand.
8. Selling and distribution expenses

Group
Company
2010
2009
2010
2009
Marketing services
(37,443)
(35,892)
(1,459)
(726)
Wages, salaries and social security
(24,574)
(25,095)
(1,206)
(1,345)
Cars maintenance
(5,142)
(4,923)
(154)
(140)
Amortisation
(3,289)
(2,844)
(7)
(9)
Other expenses related to selling and distribution

employees
(2,548)
(1,825)
Transportation expenses
(2,428)
(2,797)
(5)
(1)
Depreciation
(1,455)
(1,490)
(466)
(425)
Education and meetings
(1,331)
(1,258)
(6)
(33)
Business trips
(1,055)
(1,138)
(39)
(46)
IT and telecommunication costs
(961)
(986)
(32)
(37)
Rent
(765)
(720)
Taxes (except for social security and income tax)
(666)
(939)
Office supplies
(477)
(347)
(24)
(5)
Other
(176)
(201)
(143)
(156)
(82,310)
(80,455)
(3,541)
(2,923)
Selling and distribution expenses increased in comparison to the prior year due to the fact that in 2010 more marketing
campaigns were run.

33
9. Regulatory affairs expenses

Group
New products registration
Company
2010
2009
2010
2009
(4,737)
(4,110)
(323)
(349)
(2,121)
Variations and renewals fees
(2,113)
(954)
(32)
(100)
Services
(1,594)
(1,447)
(391)
(406)
Amortisation
(663)
(630)
(38)
(47)
Cars maintenance
(556)
(583)
(16)
(18)
Other expenses related to regulatory affairs employees
(370)
(152)
Business trips
(308)
(281)
(22)
(6)
Office supplies
(242)
(280)
(7)
(5)
(236)
(235)
(7)
(6)
(182)
(121)
(9)
Rent
(144)
(110)
Depreciation
(82)
(82)
(6)
(9)
(11,227)
(11,106)
(851)
(946)
10. Research and development expenses

Group
Company
2010
2009
2010
2009
(801)
(821)
(92)
(198)
Other direct expenses for research and development

work
(428)
(236)
(3)
(52)
Other expenses related to research and development

employees
(353)
(567)
(1)
Business trips
(91)
(87)
(8)
(33)
Cars maintenance
(88)
(83)
(8)
(6)
(83)
(47)
(4)
(11)
Depreciation
(54)
(24)
(10)
(10)
(10)
(12)
Office supplies
(40)
(14)
Amortisation
(10)
(10)
(1,958)
(1,901)
(126)
(308)

34
11. Administrative expenses

Group
Company
2010
2009
2010
2009
(14,514)
(16,461)
(5,397)
(6,110)
Consulting and other similar services
(2,336)
(2,293)
(340)
(279)
Amortisation
(2,156)
(2,334)
(14)
(23)
Depreciation
(1,658)
(1,988)
(882)
(985)
Write-off of inventories
(1,385)
(1,346)
(11)
107
Change in allowance for inventories
(1,188)
(1,229)
(24)
(135)
IT services
(1,061)
(1,316)
Business trips
(960)
(962)
(493)
(499)
Utilities
(835)
(974)
(412)
(427)
Cars maintenance
(664)
(689)
(112)
(121)
Telecommunication cost
(403)
(448)
(165)
(164)
Office supplies
(340)
(378)
(91)
(71)
Repair and maintenance
(306)
(536)
(111)
(160)
Cleaning and waste utilisation
(301)
(385)
(106)
(109)
Taxes (except for social security and income tax)

Write-off of property, plant and equipment and intangible
assets
Rent
(258)
(252)
(136)
(144)
(247)
(315)
(3)
(1)
(241)
(280)
(100)
(161)
(168)
(247)
(21)
(29)
(24)
Change in Corhydron case related provision
(150)
Change in impairment of non-current assets
285
(10)
1,738
(261)
81
84
Change in other provisions
Change in allowance for trade and other receivables

Reversal of previously written off trade and other
receivables
Other
(2,273)
(3,181)
(990)
(1,156)
(29,292)
(35,954)
(9,408)
(10,383)
During the last quarter of 2009 the Group and the Company finished a headcount optimisation process. As a result,
mutual basis agreements for employment termination were signed with some of the employees. Due to the redundancies
in 2009, the total amount of LTL 1,370 thousand was accounted in the Group administrative expenses (LTL 667
thousand expenses in the Companys administrative expenses) as termination compensations, accruals and related
taxes.
LTL 2,015 thousand Group income in 2010 of change in allowance for trade and other receivables in the Group
administrative expenses represents the reversal of the allowance of the receivable of Jelfa SA which was recorded
before the Company acquired this subsidiary, as Jelfa SA recovered the amount.
Administrative expenses include the fee paid to the auditors for the financial statements audit and other non-audit
services. Fee for the Groups and the Companys annual financial statements audit in 2010 amounted to LTL 273
thousand and LTL 121 thousand, respectively (in 2009 LTL 366 thousand and LTL 99 thousand, respectively). Non-audit
services for the Group in 2010 amounted to LTL 55 thousand.

35
12. Financial activity, net

Group
Company
2010
2009
2010
2009
Gain on HBM Pharma s.r.o. disposal
14,487
3,770
Foreign currency exchange gain, net
3,392
1,145
147
Cash income from financial instruments
2,950
6,628
19
42
136
20
Interest income
Other financial income
20,984
7,835
3,771
148
(12,809)
(14,941)
(2,518)
(4,377)
Cash outflows for financial instruments
(7,900)
(7,080)
Fair value (loss) from derivatives
(3,402)
(7,404)
(91)
(178)
(1,280)
(168)
(214)
(24,289)
(30,705)
(2,777)
(4,591)
Interest (expenses)
Foreign currency exchange (loss), net

Other financial (expenses)
On 8 July 2010 the Company sold 100% of HBM Pharma s.r.o. shares. More information about the transaction is
disclosed in Note 18.
13. Income tax

Group
Company
2010
2009
2010
2009
(7,606)
(204)
Income tax expenses

Current year income tax
Prior year current income tax correction
11
(655)
11
(722)
Deferred tax income
(2,090)
950
33
380
Income tax (expenses) benefit charged to the profit

and loss
(9,685)
91
44
(342)
In the year 2009, a prior year income tax correction was made relating to income tax expenses, arising in the Company
for the management consulting services income accounted for the year 2006 2008 (Note 7).

36
Group
Company
2010
2009
2010
2009
Losses available for offset against future taxable income
8,101
11,956
3,493
2,830
Exchange rate differences on loans
4,352
6,665
7,933
7,222
834
2,031
Deferred tax assets
Fair value of derivatives

Accruals
1,861
1,007
74
25
Receivables
979
601
149
306
Employee benefits
875
860
Inventories
255
359
22
36
36
30
Corhydron case provision

Other
259
685
344
Deferred tax asset before valuation allowance
25,485
31,416
3,738
3,541
Less: valuation allowance
(1,937)
(3,565)
(1,012)
(1,106)
Deferred income tax assets, net
23,548
27,851
2,726
2,435
(12,379)
(12,026)
(258)
(2,909)
(3,306)
Deferred tax liabilities

Intangible assets
Fair value of financial instruments through profit and loss
Other
Total deferred income tax liabilities
(624)
(51)
(677)
(15,339)
(16,633)
(258)
The Group deferred income tax asset and liability were estimated at 19% and 15% in 2010 and 2009, the Company
15%.

37
Movements in pre-tax components of temporary differences for the Group and the Company in 2010 are as follows:
Group
Balance
as at 31
December
2009
Recognised in
income
statement
Recognised
in other
comprehensive
income
HBM
Pharma
s.r.o.
disposal
Exchange
difference
Balance
as at 31
December
2010
Tax loss carry forward
66,899
(15,406)
(5,616)
1,662
47,539
Exchange rate differences on

loans
35,079
(13,600)
1,426
22,905

asset
38,011
3,052
(947)
1,636
41,752
10,693
(6,716)
414
4,391
Accruals
5,372
4,873
(579)
232
9,898
Receivables
3,592
1,774
(89)
84
5,361
Employee benefits
4,526
(116)
195
4,605
Inventories
1,940
(172)
(453)
58
1,373
Provisions
157
21
186
4,041
(2,752)
79
1,368

liability
(63,295)
2,231
(2,730)
(63,794)
Intangible assets
(17,400)
2,821
(731)
(15,310)
Fair value of financial instruments

through profit and loss
(3,285)
3,400
(115)
Other liabilities
(3,558)
3,426
(136)
(268)
Temporary differences before

valuation allowance
82,772
(10,448)
(12,332)
(2,068)
2,082
60,006
(20,314)
1,204
5,616
2,068
(194)
(11,615)
Total temporary differences
62,458
(9,244)
(6,716)
1,888
48,391
Deferred income tax, net
11,218
(2,090)
(1,197)
278
8,209
Other assets
Company

Receivables
Accruals
Inventories
Balance as at 31
December 2009
Recognised in
income statement
Balance as at 31
December 2010
18,867
4,420
23,287
2,040
(1,047)
993
167
326
493
240
(93)
147
2,294
(2,294)
(1,720)
(1,720)

valuation allowance
23,608
(408)
23,200
(7,372)
625
(6,747)
16,236
217
16,453
2,435
33
2,468
Other assets
Property, plant and equipment liability
As at 31 December 2010 the LTL 23,287 thousand balance of tax loss carried forward of the Company can be carried
forward for an indefinite period. The remaining balance of the Group tax loss carried forward (LTL 24,252 thousand) can
be carried forward until 2011.
38
Movements in pre-tax components of temporary differences for the Group and the Company in 2009 are as follows:
Group
Balance
as at 31
December
2008
Recognised
in income
statement
Recognised
in other
comprehensive
income
Exchange
difference
Balance
as at 31
December
2009
86,397
8,996
(27,563)
(931)
66,899
Exchange rate differences on loans
46,400
(10,947)
(374)
35,079
Property, plant and equipment asset
37,353
474
184
38,011
11,939
(1,226)
(20)
10,693
Accruals
10,692
(5,115)
(205)
5,372
Receivables
5,212
(1,588)
(32)
3,592
Employee benefits
4,347
158
21
4,526
Inventories
2,914
(942)
(32)
1,940
Corhydron case provision
150
157
3,007
1,008
26
4,041
Property, plant and

equipment liability
(64,605)
1,405
(95)
(63,295)
Intangible assets
(20,153)
2,683
70
(17,400)

through profit and loss
(10,989)
7,405
299
(3,285)
Other assets
Other liabilities
(6,716)
3,037
121
(3,558)

valuation allowance
105,798
6,724
(28,789)
(961)
82,772
(45,575)
2,235
27,563
(4,537)
(20,314)
60,223
8,959
(1,226)
(5,498)
62,458
11,546
950
(236)
(1,042)
11,218
Company
Balance as at 31
December 2008
Recognised in income
statement
Balance as at 31
December 2009
12,855
6,012
18,867
2,065
(25)
2,040
Accruals
240
(73)
167
Inventories
140
100
240

Receivables
Property, plant and equipment asset
100
(100)
1,665
629
2,294

valuation allowance
17,065
6,543
23,608
(6,790)
(582)
(7,372)
10,275
5,961
16,236
2,055
380
2,435
Other assets
As at 31 December 2009 the LTL 18,867 thousand balance of tax loss carried forward of the Company can be carried
forward for an indefinite period. The remaining balance of the Group tax loss carried forward (LTL 48,032 thousand) can
be carried forward until 2011.

39
The reconciliation of the total income tax to the theoretical amount that would arise using the tax rate of the Group and
the Company is as follows:
Group
Profit (loss) before income tax
Tax calculated at statutory tax rate*
2010
2009
2010
2009
62,999
17,753
(1,885)
(439)
9,450
3,551
(283)
(88)
Tax non-deductible income (expenses)

Change in allowance for deferred tax
255
3,306
322
1,918
(1,628)
(5,162)
(94)
(252)
11
(655)
11
(722)
1,597
(617)
(514)
(514)
9,685
(91)
(44)
342
Correction of prior year current income tax

Differences of tax rates in subsidiaries
Change in tax rate
Income tax expenses (benefit) recorded in the profit and loss
Company
* 15% in 2010 and 20% in 2009.
14. Earnings per share

Diluted earnings per share equal basic earnings per share as there were no potential shares issued as at 31 December
2010 and 2009.
The following reflects the income and share data used in the basic and diluted earnings per share computations for the
Group:
2010
2009
Net profit
53,314
17,844
Weighted average number of ordinary shares (thousand)
31,106
31,106
1.71
0.57
Earnings (loss) per share (in LTL)
15. Dividends
The General Shareholders Meeting of the Company, which took place on April 17, 2008 declared a dividend of LTL
18,664 thousand for the financial year 2007 (LTL 0.6 per share). As at 31 December 2010 unpaid dividends payable
amounted to LTL 157 thousand (LTL 3,710 as at December 2009) (Note 30).
No dividends were approved or declared for the financial years 2008-2009.

40
16. Property, plant and equipment

Group
Land
Buildings
Machinery
and
equipment
Vehicles
and other
assets
Construction in
progress
Total
5,292
171,347
162,183
25,037
13,841
377,700
Additions
46
2,339
1,289
397
4,071
Transfer to inventories
(26)
(1)
(27)
Cost:
Balance as at
1 January 2009
Disposals and write-offs
(56)
(1,344)
(1,525)
(266)
(3,191)
12
263
294
40
(5)
604
2,789
5,068
45
(7,902)
5,304
174,389
168,514
24,885
6,065
379,157
645
3,577
1,635
2,848
8,705
(19)
(389)
(1,202)
(957)
(2,567)
(1,067)
(30,823)
(26,255)
(1,640)
(497)
(60,282)
183
4,534
4,451
1,297
33
10,498
58
361
(419)
4,401
148,414
149,446
25,220
8,030
335,511
Balance as at
1 January 2009
22,148
61,202
11,576
94,926
Charge for the year
7,631
16,178
3,757
27,566
(21)
(1)
(22)
(56)
(1,259)
(1,149)
(2,464)
Foreign exchange difference
208
533
120
861
Balance as at
31 December 2009
29,931
76,633
14,303
120,867
Charge for the year
6,942
14,925
3,554
25,421
(283)
(1,076)
(848)
(2,207)
Disposal of HBM Pharma s.r.o.

(Note 18)
(13,504)
(12,318)
(1,365)
(27,187)
Impairment
29
29
704
2,079
556
3,339
Balance as at
31 December 2010
23,790
80,272
16,200
120,262
Net book value as at

31 December 2010
4,401
124,624
69,174
9,020
8,030
215,249

31 December 2009
5,304
144,458
91,881
10,582
6,065
258,290

Reclassifications
Balance as at
31December 2009
Additions
Disposal of HBM Pharma s.r.o.
(Note 18)
Reclassifications
Balance as at
31 December 2010
Accumulated depreciation:

41
Company
Buildings
Machinery
and
equipment
Vehicles
and other
assets
Construction in
progress
Total
36,387
35,152
2,260
13,232
87,031
11
80
163
153
407
(22)
(1)
(23)
Cost:
Additions
Reclassifications
Balance as at 31December 2009
(56)
(543)
(140)
(739)
2,789
4,970
(7,759)
39,131
39,637
2,282
5,626
86,676
Additions
269
276
(53)
(17)
(70)
39,131
39,853
2,265
5,633
86,882
414
15,255
832
16,501
1,554
2,568
355
4,477
Balance as at 31 December 2010

Charge for the year
(17)
(1)
(18)
(56)
(541)
(112)
(709)
1,074
20,251
1,912
17,265
Charge for the year
1,594
2,338
334
4,266
(52)
(17)
(69)
3,506
19,551
1,391
24,448

31 December 2010
35,625
20,302
874
5,633
62,434

31 December 2009
37,219
22,372
1,208
5,626
66,425

The depreciation charge of the Groups and the Companys property, plant and equipment for the year 2010 amounts to
LTL 25,421 thousand and LTL 4,266 thousand, respectively (in the year 2009, respectively, LTL 27,566 thousand and
LTL 4,477 thousand). Amounts of LTL 3,625 thousand and LTL 1,740 thousand for the year 2010 (LTL 3,937 thousand
and LTL 1,782 thousand for the year 2009) have been included into operating expenses in the Groups and the
Companys statement of comprehensive income, respectively. The remaining amounts have been included into
production cost for the year.
Property, plant and equipment of the Group and the Company with a net book value of LTL 196,733 thousand and
LTL 55,647 thousand, respectively, as at 31 December 2010 (LTL 233,005 thousand and LTL 64,993 thousand as at
31 December 2009) was pledged to banks as a collateral for the loans (Note 25).
Property, plant and equipment of the Group and the Company with an acquisition cost of LTL 21,943 thousand and
LTL 7,853 thousand, respectively, were fully depreciated as at 31 December 2010 (as at 31 December 2009,
respectively, LTL 66,870 thousand and LTL 6,951 thousand) but were still in active use.
As at 31 December 2010 and 2009, the Group and the Company had no commitment to purchase property, plant and
equipment.
During the year 2010 and 2009, the Group and the Company did not capitalise any borrowing cost, as there were no
qualifying assets acquisition.
The recoverable amount of the Companys property, plant and equipment have been determined based on the value in
use calculation using cash flow projections based on financial budgets approved by the Group management covering a
5-year period. The pre-tax discount rate applied to cash flow projections is 8.4% (13.3% for year 2009) and cash flows
beyond the 5-year period are extrapolated using 5% growth rate (1% for year 2009), which reflects the expected average
rate of economic growth. As at 31 December 2010 and 2009, there were no indications of the Companys property, plant
and equipment impairment.

42
17. Intangible assets

Group
Goodwill
Licenses
Software
Internally
generated
intangible
assets
Intangible
assets under
development and
prepayments
Total
253,629
38,306
13,263
3,598
893
309,689
2,238
103
2,380
4,721
Cost:
Balance as at
1 January 2009
Additions
(2)
(18)
(41)
(61)
640
187
28
187
1,051
(195)
195
254,269
40,534
13,376
3,607
3,614
315,400
Additions
1,723
193
4,489
6,405
(28)
(10)
(38)
Disposals of HBM Pharma s.r.o.

(Note 18)
(13)
(2,206)
(2,219)
11,031
1,777
446
151
170
13,575
558
(558)
265,300
44,551
11,799
3,758
7,715
333,123
Balance as at
1 January 2009
8,884
6,282
181
15,347
Charge for the year
3,762
2,470
689
6,921
(2)
(11)
(13)
189
95
30
314
Balance as at
31 December 2009
12,833
8,836
900
22,569
Charge for the year
4,799
2,288
733
7,820
(27)
(9)
(36)
Disposals of HBM Pharma s.r.o.

(Note 18)
(13)
(2,047)
(2,060)
Reversal of impairment
(314)
(314)
592
312
41
945
Balance as at
31 December 2010
17,870
9,380
1,674
28,924

31 December 2010
265,300
26,681
2,419
2,084
7,715
304,199

31 December 2009
254,269
27,701
4,540
2,707
3,614
292,831

Reclassifications
Balance as at
31 December 2009

Reclassifications
Balance as at
31 December 2010
Impairment testing of goodwill

The goodwill acquired through Jelfa SA and Pharmaceutical Laboratory HOMEOFARM Sp. z o.o business combinations
in the amounts of LTL 262,076 thousand and LTL 3,224 thousand, respectively, as at 31 December 2010 (LTL 251,180
and LTL 3,089 thousand, respectively, as at 31 December 2009) has been allocated to the cash-generating units for
impairment testing according to the reportable segments (Note 5).
43
The recoverable amount of the tested cash-generating units have been determined based on the value in use calculation
using cash flow projections based on financial budgets approved by the Group management covering a 5-year period.
The pre-tax discount rate applied to cash flow projections is 10.4% (13.3% for year 2009) and cash flows beyond the 5year period are extrapolated using 0% growth rate (0% for year 2009), which reflects the expected average rate of
economic growth. As at 31 December 2010 and 2009, there were no indications of goodwill impairment.
The Group management believes that any reasonably possible change in the key assumptions on which recoverable
amounts are based would not cause the aggregate carrying amounts to exceed the aggregate recoverable amounts of
the cash-generating units.
Company
Intangible
assets under
development
and
prepayments
Total
Licenses
Software
Internally
generated
intangible
assets
304
1,155
100
40
1,599
(2)
(11)
(13)
302
1,144
100
40
1,586
20
33
574
627
(27)
(10)
(37)
Balance as at
31 December 2010
295
1,167
100
614
2,176
Cost:
Balance as at
31December 2009
Additions
240
300
15
555
Charge for the year
25
86
20
131
(2)
(11)
(13)
Balance as at
31 December 2009
263
375
35
673
Charge for the year
19
74
20
113
(26)
(9)
(35)
Balance as at
31 December 2010
256
440
55
751

31 December 2010
39
727
45
614
1,425

31 December 2009
39
769
65
40
913
The Group and the Company have LTL 2,084 thousand and LTL 45 thousand internally generated intangible assets as
at 31 December 2010 (LTL 2,707 thousand and LTL 65 thousand as at 31 December 2009).
The amortisation charge of the Groups and the Companys intangible assets for the year 2010 amounts to
LTL 7,820 thousand and LTL 113 thousand, respectively (in the year 2009 respectively LTL 6,921 thousand and
LTL 131 thousand). Amounts of LTL 6,118 thousand and LTL 59 thousand for the year 2010 (LTL 5,818 thousand and
LTL 79 thousand for the year 2009) have been included into operating expenses in the Groups and the Companys
statement of comprehensive income, respectively. The remaining amounts have been included into production cost for
the year.
Part of the non-current intangible assets of the Group and the Company with the acquisition value of LTL 2,557 thousand
and LTL 491 thousand, respectively, as at 31 December 2010, was fully amortised (LTL 7,753 thousand and
LTL 494 thousand respectively as at 31 December 2009) but was still in use.

44
18. Investments
Company
Shares of Jelfa SA (100%)
2010
2009
292,704
292,704
Shares of HBM Pharma s.r.o. (100%)

Total investments
41,691
292,704
334,395
All Jelfa SA shares owned by the Company were pledged to the banks as collateral for the loans in 2010 and 2009 (Note
25).
As disclosed in Note 1 and Note 12, in July 2010 the Company sold 100% of HBM Pharma s.r.o. shares. The table below
summarises the asset and liabilities over which control was lost:
Group
Property, plant and equipment (Note 16)
33,095
Intangible assets (Note 17)
159
Inventories
9,923
Prepaid income tax
38
Trade receivables
26,797
Other receivables
4,865
Prepayments and deferred expenses
746
Cash and cash equivalents
1,195
Total assets disposed of
76,818
1,875
Employee benefit liability (Note 31)
580
Current loans
11,916
Trade payables
16,135
3,437
Total liabilities, disposed of
33,943
Net assets disposed of
42,875
Gain on disposal is accounted in finance income of the Group and the Company Statements of Comprehensive Income
(Note 12).The Company gained LTL 3,770 thousand from this disposal. The table below presents the gain on disposal in
the Group.
Consideration received
45,461
Net assets disposed of
(42,875)
Cumulative exchange differences in respect of the net assets of the subsidiary reclassified
from equity to profit or loss on loss of control of subsidiary
11,901
Gain on disposal
14,487
Following table summarises the Group and the Company proceeds from HBM Pharma s.r.o. disposal:
Group
Company
45,461
(26,471)
45,461
(26,471)
Less: cash and cash equivalent balances disposed of
(1,195)
Proceeds from disposal
17,795
18,990
Consideration received
Settled liabilities amounts

45
19. Inventories
Group
Raw materials
Work in progress
Finished goods
Equipment available for sale
Less: net realisable value allowance
Company
2010
2009
2010
2009
10,444
17,227
1,035
1,019
7,252
6,281
539
464
19,174
20,586
3,614
2,009
108
109
108
109
36,978
44,203
5,296
3,601
(1,369)
(1,961)
(147)
(242)
35,609
42,242
5,149
3,359
The acquisition cost of the Groups and the Companys inventories accounted for at net realisable value as at
31 December 2010 amounted to LTL 1,387 thousand and LTL 160 thousand, respectively (LTL 2,008 thousand and
LTL 248 thousand as at 31 December 2009).
As disclosed in Note 25, inventories of the Group and the Company with the carrying value of LTL 35,609 thousand and
LTL 5,149 thousand, respectively, as at 31 December 2010 were pledged to banks as a collateral for the loans
(LTL 36,420 thousand and LTL 3,359 thousand, respectively, as at 31 December 2009).
The inventories of the Group and the Company recognised as expenses during 2010 amounted to LTL 67,026 thousand
and LTL 3,299 thousand, respectively (LTL 77,878 thousand and LTL 2,323 thousand, respectively, during 2009).
The inventories write-down of the Group and Company recognised as expenses during 2010 and 2009 are disclosed in
Note 11.
In its accounting records the Group does not reflect the cost of inventories of third parties held in its storage facilities for
processing. As at 31 December 2010 inventories in amount of LTL 617 thousand were held in the Companys storage
facilities and were owned by third parties. The Company had no commitments related to these inventories. As at 31
December 2009 the Group and the Company did not hold in its storage facilities any inventories of third parties.
20. Trade receivables

Group
2010
Company
2009
2010
2009
Trade receivables, gross
57,096
64,036
9,770
6,780
Less: allowance for doubtful trade receivables
(1,724)
(2,582)
(157)
(157)
55,372
61,454
9,613
6,623
Trade receivables are non-interest bearing and are generally on 45 150 days terms.
Trade receivables of the Group amounting to LTL 20,000 thousand as at 31 December 2010 were pledged to banks as
the collateral for the loans (LTL 49,793 thousand of the Group as at 31 December 2009) (Note 25).
As at 31 December 2010 trade receivables of the Group and the Company with the nominal value of LTL 1,724 thousand
and LTL 157 thousand (as at 31 December 2009 LTL 2,582 thousand and LTL 157 thousand) were impaired and fully
provided for.

46
Movements in the provision for impairment of individually impaired receivables of the Group were as follows:
Group
Opening balance
2010
2009
2,582
3,207
Charge for the year
308
414
Utilised
(36)
(1,054)
HBM Pharma s.r.o. disposal (note 18)
(1,229)
99
15
1,724
2,582

Closing balance
There were no movements in the Companys provision for impairment of receivables in 2010 and 2009. Changes in
allowance for doubtful trade receivables for the year 2010 and 2009 have been included into administrative expenses.
The ageing analysis of trade receivables of the Group as at 31 December 2010 and 2009 was as follows:
Trade
receivables
neither past due
nor impaired
Trade receivables past due but not impaired
Total
Less than 30
days
30 90
days
90 180
days
More than 180

days
2010
53,083
1,688
541
54
55,372
2009
57,886
3,152
194
148
74
61,454
The ageing analysis of trade receivables of the Company as at 31 December 2010 and 2009 was as follows:
Trade
receivables
neither past due
nor impaired
Trade receivables past due but not impaired
Total
Less than 30
days
30 90
days
90 180
days
More than 180

days
2010
8,798
804
11
9,613
2009
4,969
1,654
6,623
Credit quality of financial assets neither past due nor impaired

With respect to trade receivables that are neither impaired nor past due, there are no indications as at the reporting date
that the debtors will not meet their payment obligations since the Group and the Company trades only with recognised,
creditworthy third parties.
21. Other receivables

Group
Refundable VAT
Receivables from subsidiaries
Other receivables
Company
2010
2009
2010
2009
2,092
4,284
2,088
400
405
131
71
2,492
4,689
2,219
73
Other receivables are non-interest bearing and are generally on 14 60 days terms. Receivables from subsidiaries are
described in Note 35 in more details.

47
22. Cash and cash equivalents

Group
Cash at bank
Cash on hand
Company
2010
2009
2010
2009
2,419
3,234
119
177
56
183
2,475
3,417
119
177
Cash at bank earns interest at floating rates based on daily bank deposit rates. The fair value of cash as at 31 December
2010 of the Group and the Company is LTL 2,475 thousand and LTL 119 thousand, respectively (LTL 3,417 thousand
and LTL 177 thousand as at 31 December 2009).
The Groups and the Companys foreign and local currency accounts in banks amounting to LTL 2,145 thousand and
LTL 119 thousand, respectively, as at 31 December 2010 (LTL 1,624 thousand and LTL 83 thousand, respectively, as at
31 December 2009) are pledged to the banks as collateral in relation to the loan (Note 25).
23. Share capital

As at 31 December 2010 and 2009 the share capital of the Company comprised of 31,105,920 ordinary shares with a
par value of LTL 1 each.
The share capital of the Company was fully paid as at 31 December 2010 and 2009. The subsidiaries did not hold any
shares of the Company as at 31 December 2010 and 2009. The Company did not hold its own shares.
The difference of LTL 248,086 thousand between the par value and emission value was accounted for as share premium
as at 31 December 2010 and 2009.
The Company has a valid Phantom Share Option Plan approved by the General Shareholders meeting in 2009 which
appies to the top and middle management of the Company and its subsidiaries. According to the Phantom Share Option
Plan option is exercised not through the acquisition of the option shares but by receiving a monetary compensation after
the sale of the Companys shares by certain shareholders of the Company. 621,000 share options were granted till the
end of the year 2010. If the Phantom Share Option Plan is not executed by the end of 2013, it will terminate
automatically. The Company did not account for the liability for the Phantom Share Option Plan, as there was no reliable
information about their execution conditions.
24. Reserves
Legal reserve
A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit,
calculated in accordance with IFRS, are compulsory until the reserve reaches 10% of the share capital. The reserve can
be used only to cover the accumulated losses of the Company. As at 31 December 2010 and 2009 the legal reserve of
the Company was fully formed.
Fair value reserve
This reserve is accounted for according to IAS 39 requirements. Changes in cash flow hedges are presented in this
reserve (Note 27).
Foreign currency translation reserve
The foreign currency translation reserve is used for translation differences arising on consolidation of financial
statements of foreign subsidiaries.
Exchange differences are recognised in statement of other comprehensive income and accumulated in equity in the
consolidated financial statements until disposal of the investment. Upon disposal of the corresponding investment, all the
accumulated exchange differences are reclassified to the profit and loss.

48
25. Loans
Group
Company
2010
2009
2010
2009
106,252
178,075
30,265
106,252
178,075
30,265
Current portion of non-current loans
65,049
61,119
22,029
19,479
Current loans
17,171
36,623
11,182
82,220
97,742
22,029
30,661
188,472
275,817
22,029
60,926
Non-current
Non-current loans
Current
Total borrowings
Non-current and current loans of the Group include:
Group
Interest rate
Original
currency
Principal
amount in
original
currency
Maturity date
As at 31
December
2010
As at 31
December
2009
Bank Polska Kasa

Opieki S.A./Bank
Zachodni WBK S.A.
3-month
EURIBOR+3.6%
EUR
73,997
May 2014
149,272
190,650
Swedbank, AB
6-month
EURIBOR+3.5%
EUR
11,874
July 2015
20,752
35,974
Tatra Bank a.s.
1-month
BRIBOR+2.4%
EUR
4,979
February 2011
10,904
6.50%
LTL
7,978
December
2010
870
8,497
Bank Zachodni
WBK S.A.
1-month
WIBOR+2.5%
PLN
10,000
May 2011
8,669
8,240
Bank Polska Kasa

Opieki S.A.
1-month
WIBOR+2.5%
PLN
10,000
May 2011
8,460
7,647
7%
EUR
1,448
February 2010
5,000
6-month
EURIBOR+4%
EUR
2,000
March 2010
2,882
6.50%
LTL
2,358
June 2010
260
2,510
Tatra Bank a.s.
1-month
BRIBOR+2.4%
EUR
1,413
April 2010
1,771
Natural persons
6.50%
LTL
1,465
December
2010
147
1,563
Deutsche Bank
PBC S.A.
3-months
WIBOR
PLN
250
November
2010
137
1-day
VILIBOR+1%
EUR
83,400
December
2010
42
42
Total borrowings
188,472
275,817
Less current portion
(82,220)
(97,742)
Non-current loans, net of current portion
106,252
178,075
Lender
Invalda, AB
Swedbank, AB
Swedbank, AB *
Amber Trust II SCA
Nordea Bank Finland

Plc Lithuanian Branch
* The amount relates to liability under factoring with recourse agreement.

49
Non-current and current loans of the Company include:

Company
Interest rate
Original
currency
Principal
amount in
original
currency
Maturity date
As at 31
December
2010
As at 31
December
2009
6-month
EURIBOR+3.5%
EUR
11,874
July 2015
20,752
35,974
6.50%
LTL
7,978
December 2010
870
8,497
7%
EUR
1,448
February 2010
5,000
6-month
EURIBOR+4%
EUR
2,000
March 2010
2,882
Amber Trust II SCA
6.50%
LTL
2,359
June 2010
260
2,510
Natural persons
6.50%
LTL
1,465
December 2010
147
1,563
1-month
BRIBOR+1.20%
EUR
5,000
December 2009
1,200
Jelfa SA
Jelfa SA
5.67%
7.10%
EUR
PLN
995
4,000
February 2010
February 2010
203
285
Jelfa SA
7.01%
PLN
3,500
February 2010
229
Jelfa SA
7.02%
EUR
762
February 2010
168
Jelfa SA
4.67%
EUR
700
February 2010
105
Jelfa SA
7.20%
PLN
2,500
February 2010
142
Jelfa SA
6.50%
EUR
1,350
December 2009
268
Jelfa SA
6.01%
EUR
400
December 2009
62
Jelfa SA
6.03%
EUR
600
December 2009
1,121
Jelfa SA
6.10%
EUR
200
December 2009
Lender
Swedbank, AB
Invalda, AB
Swedbank, AB
Swedbank, AB*
HBM Pharma s.r.o.
Total borrowings
Less current portion
Non-current loans, net of current portion
717
22,029
60,926
(22,029)
(30,661)
30,265
* The amount relates to liability under factoring with recourse agreement.

The terms of repayments of non-current and current loans are as follows:
Group
2010
Within one year
From one to five years
After five years
Company
2009
2010
2009
82,220
97,742
22,029
30,661
106,252
174,227
26,417
3,848
3,848
188,472
275,817
22,029
60,926
As at 31 December 2010 the Group and the Company had unused funds in credit lines amounting to LTL 520 thousand
and LTL 0 thousand, respectively, (LTL 2,132 thousand and LTL0 thousand, respectively, as at 31 December 2009).
As at 31 December 2010 the Company did not comply with the financial indebtedness to EBITDA and interest service
coverage ratio covenants, which should not be higher than 4.5 and not be lower than 2.5, respectively and the
requirement for minimum value of inventories, which should be not less than LTL 6,000 thousand which are set out in
the loan agreement with Swedbank, AB. Due to this reason the non-current bank loan in the amount of LTL 16,177 has
been presented as current liabilities in the Groups and Companys balance sheets as at 31 December 2010.

50
The assets pledged to the banks are as follows:

Group
Company
2010
2009
2010
2009
Jelfa SA shares (Note 18)
292,704
292,704
292,704
292,704
Property, plant and equipment (Note 16)
196,733
233,005
55,647
64,993
Inventories (Note 19)
35,609
36,420
5,149
3,359
Trade receivables (Note 20)
20,000
49,793
2,145
1,624
119
83
Cash (Note 22)
In addition, the shares of Pharmaceutical Laboratory HOMEOFARM Sp. z o.o. were pledged to the banks by Jelfa SA as
the collateral for the loan as at 31 December 2010 and 2009.
26. Finance lease obligations

The assets leased by the Group and the Company under finance lease contracts consist of buildings, machines,
equipment and vehicles. Apart from the lease payments, the most significant liabilities under lease contracts are property
maintenance and insurance. The terms of finance lease are from 2 to 5 years. The distribution of the net book value of
the assets acquired under finance lease is as follows:
Group
Buildings
Machines and equipment
Vehicles
Company
2010
2009
2010
2009
31
4,060
5,100
268
536
698
1,618
499
744
4,758
6,749
767
1,280
Principal amounts of finance lease payables at the year-end denominated in national and foreign currencies are as
follows:
Group
Company
2010
2009
2010
2009
EUR
280
3,622
280
804
PLN
3,093
1,190
3,373
4,812
280
804
As at 31 December 2010 the interest rate on the finance lease obligations in EUR varies depending on the 6-month
EURIBOR+0.59% to 1.15% (6-month EURIBOR+0.95% to 3.99%, 6-month LIBOR+1% to 1.1% and 3-month
BRIBOR+1.5% as at 31 December 2009). The interest rate for the remaining portion of the finance lease liability is fixed
from 7.08% to 13.8% (5.76% to 17.16% as at 31 December 2009), which also includes the servicing component.
Future minimal lease payments under the above mentioned finance lease contracts as at 31 December 2010 and 2009
are as follows:
Group
Company
2010
2009
2010
2009
Within one year
1,574
3,208
227
537
From one to five years
2,382
1,898
57
285
Total finance lease obligations
3,956
5,106
284
822
Interest
(583)
(294)
(4)
(18)
Present value of finance lease obligations
3,373
4,812
280
804
- current
1,254
3,025
223
523
- non-current
2,119
1,787
57
281
Finance lease obligations are accounted for as:

51
27. Other financial assets and financial liabilities

Group
Long term receivables
Current derivative assets
Non-current financial liabilities interest rate swaps (effective hedges)
Current financial liabilities interest rate swaps (effective hedges)
2010
2009
17
21
3,285
17
3,306
3,562
4,391
7,131
4,391
10,693
On 3 June 2008 Jelfa SA PLN loans from banks Bank Polska Kasa Opieki S.A. and Bank Zachodni WBK S.A. amounting
to PLN 248,000 thousand (principal amount in original currency PLN 310,000 thousand) were converted to EUR at
3.3515 PLN/EUR rate to EUR 73,997 thousand. In connection with this conversion Jelfa SA concluded an agreement for
hedging instruments and derivative instruments.
Derivatives not designated as hedging instruments
The Group company Jelfa SA used EUR denominated borrowings in Bank Polska Kasa Opieki S.A. and Bank Zachodni
WBK S.A. and PLN/EUR option contracts to manage some of its transaction exposures. These currency exchange
option contracts were not designated as cash flow, fair value or net investment hedges and were entered into for periods
consistent with currency transaction exposures, generally one to 3 months. Such derivatives did not qualify for hedge
accounting.
Cash flow hedges
As at 31 December 2010 the Group company Jelfa SA had an interest rate swap agreement in place with a notional
amount outstanding of EUR 43,244 thousand (LTL 149,272 thousand) (as at 31 December 2009 EUR 55,554 thousand
(LTL 190,650 thousand)) whereby the Group receives a variable rate equal to 3-month EURIBOR and pays a fixed rate
of 5.25%.
The cash flow hedges of the expected loan repayments were assessed to be highly effective and a net unrealised loss of
LTL 4,391 thousand with deferred tax assets of LTL 834 thousand (as at 31 December 2009 - LTL 10,693 thousand with
deferred tax assets of LTL 2,031 thousand) relating to the hedging instruments is included in the Group equity. The fair
value loss of LTL 3,557 deferred in equity until 31 December 2010 (LTL 8,662 thousand as at 31 December 2009) is
expected to be released to the consolidated statement of comprehensive income till August 2011 on a quarterly basis
when loans repayments are due.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
As at 31 December 2010 and 2009 the value of derivatives not designated as hedging instruments and cash flow hedges
have been calculated using Level 2 valuation technique. During the reporting period ending 31 December 2010 and
2009, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of
Level 3 fair value measurements.

52
28. Deferred income from subsidies

On 21 January 2005 the Ministry of Economy of the Republic of Lithuania, public institution Lithuanian Development
Agency for Small and Medium Sized Enterprises and the Company concluded an agreement to receive grants for the
financing of constructions of a new production plant of the Company. The total approved grant according to the amended
agreement amounts to LTL 16,061 thousand and is granted as actual expenses on construction are incurred. The total
amount of the received grant by the Company amounted to LTL 16,055 thousand.
During 2010, LTL 824 thousand of grant amortisation were released (LTL 794 thousand in 2009): LTL 376 thousand
have been included to the profit and loss of the Company and the Group (LTL 353 thousand in 2009), the remaining LTL
448 thousand (LTL 441 thousand in 2009) have been included into production cost for the year.
There are conditions set in the grant agreement, which if not fulfilled, the Agency for Small and Medium Sized
Enterprises might cancel the grant agreement and ask to return the paid money back. The Company has fulfilled all set
conditions in years 2010 and 2009.
29. Trade payables

Group
Trade payables for inventories
Company
2010
2009
2010
2009
10,101
16,347
1.049
493
Trade payables for capital expenditure
1,057
1,999
76
205
Trade payables for services
7,283
14,701
1,151
951
34,012
27,519
18,441
33,047
36,288
29,168
Trade payables for Group companies
Trade payables are non-interest bearing and are normally settled on 30 90 days terms. For terms and conditions
relating to trade payables to related parties refer to Note 35.
30. Other current liabilities

Group
Company
2010
2009
2010
2009
Taxes, salaries and wages, social security
4,265
6,690
1,230
1,617
Vacation pay accrual
2,112
2,013
806
631
Discounts for customers
1,567
2,112
326
345
Dividends payable (Note 15)

Other payables and accrued liabilities
157
3,710
157
3,710
4,729
1,858
778
204
12,830
16,383
3,297
6,507
Other payables are non-interest bearing and have an average term of 30 days.
31. Employee benefits

The Companys subsidiary Jelfa SA and ex-subsidiary HBM Pharma s.r.o. are required by the law to pay certain one-off
benefits to employees upon their retirement. This payment amounts to 150% monthly salary in Jelfa SA. In HBM Pharma
s.r.o. 100% monthly salary.
In addition, Jelfa SA and HBM Pharma s.r.o. pay additional jubilees benefits to their employees. In Jelfa SA jubilees are
paid to the employees, who have been working for at least 15 years, whereas at least 5 years in this period have been
worked in Jelfa SA. Such employees are entitled from 100% to 700% monthly salary based on the years of the
employment. In HBM Pharma s.r.o. every 10 years employment jubilee was entitled with EUR 332 benefit in 2010 and
2009.
53
Total amount of employee benefit expenses of the Group amounted to LTL 510 thousand during the year ended 31
December 2010 (LTL 657 thousand during the year ended 31 December 2009) and are included in employee benefits
and related social insurance contributions expenses in the Group's statement of comprehensive income.
The following table summarizes the components of net benefit expenses recognized in the Groups statement of
comprehensive income, the balance sheet and the principal assumptions used in determining employee benefits
obligation.
Group
Opening balance
2010
2009
5,116
5,045
Interest cost on benefit obligation
276
225
Current service cost and curtailment
234
577
(145)
510
657
Benefits paid
(634)
(604)
HBM Pharma s.r.o. disposal (Note 18)
(580)
194
18
Closing balance
4,606
5,116
Discount rate
5.8%
5.1%
Employee turnover rate
4.1%
4.3%
Expected average annual salary increases
3.4%
3.7%
Actuarial losses on obligation

Net benefit expenses (recognized in employee benefits and related social insurance
contributions expenses)
Exchange differences
32. Provisions
Group
2010
Opening balance
2009
157
Change for the year
24
150
Unused amounts reversed
(3)

Closing balance
186
157
The provision in amount of LTL 162 thousand as at 31 December 2010 (LTL 157 thousand as at 31 December 2009)
relates to the Corhydron issue, originating in 2006 year, when defective packages of Corhydron 250, which were
produced before the acquisition of the subsidiary Jelfa SA, had been sold in the Polish market.
The prosecutor's office has been holding a significant part of Corhydron 250 for the investigation purpose and during
2009 has decided that these medicines are no longer necessary for the purpose of the ongoing investigation. The
prosecutor's office intends to return the whole remaining volume of Corhydron 250 directly to Jelfa SA. The provision is
hold in order to cover these expected medicines return.
33. Operating lease commitments

The Group has several operating leases agreements for vehicles, which last 3 years. There are no restrictions placed
upon the Group by entering into these leases. Future minimum rentals payable under non-cancellable operating leases
as at 31 December are as follows:
Group
Within one year
After one year but not more than five years
2010
2009
578
1,465
42
602
620
2,067

54
34. Financial risk management objectives and policies

The Groups and the Companys principal financial liabilities, other than derivatives, comprise bank loans and overdrafts,
finance leases and trade payables. The main purpose of these financial liabilities is to raise finance for the Groups and
the Companys operations. The Group and the Company has various financial assets such as trade and other
receivables and cash, which arise directly from its operations. The Group also enters into derivative transactions.
The Group uses foreign currency options and interest rate swaps in order to hedge its foreign currency and interest rate
risks. The Group does not use derivative financial instruments for speculative purposes.
The principal financial risks to which the Group and the Company is exposed are those of interest rate, liquidity, foreign
exchange and credit. The Group Management reviews and agrees policies for managing each of these risks, which are
summarised below.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Groups and the Companys exposure to the risk of changes in market interest
rates relates primarily to the long-term debt obligations with floating interest rates. Current environment is not attractive
to target fixed interest rates (fixed interest rate is significantly higher than the float, and due to the volatility in the market
fixed interest rate is offered to short period of time only) and therefore the Group and the Company keeps majority of its
financial liabilities at floating interest rates.
To manage the interest rate risk the Group company Jelfa SA entered into interest rate swaps, in which it agreed to
exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference
to an agreed-upon notional principal amounts. These swaps are designated to hedge Jelfa SA loan from banks Bank
Polska Kasa Opieki S.A. and Bank Zachodni WBK S.A. (Note 27). The Group and the Company is ready to enter other
interest rate swap agreements if this allows to further mitigating risk.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables
held constant, of the Groups and the Companys profit before tax (through the impact on floating rate borrowings), which
also effects the Groups and the Companys equities and the Groups equity (due to changes in the fair value of interest
rate swaps). There is no impact on the Companys equity, other than current year profit impact.
2010
Increase/
decrease
in basis
points
Effect on
equity
Effect on profit before

tax
2009
Increase/
decrease
in basis
points
Group
Group
Company
2,075
(850)
(104)
+50
Effect on
equity

tax
Group
Group
Company
5,555
(1,211)
(200)
EUR
+50
PLN
+50
(85)
+50
(80)
EUR
-50
(2,075)
850
104
-50
(5,555)
1,211
200
PLN
-50
85
-50
80
Liquidity risk
The Management Board reviews the Groups liquidity risks annually as part of the planning process and on ad hoc basis.
The Board considers short-term requirements against available sources of funding taking into account cash flow.
The Group and the Company monitors its risk to a shortage of funds using a standard weekly report on the cash flows
with a liquidity projection for the future periods. The report considers projected cash flows from operations and allows for
the Group management to effectively plan cash injection if needed.
The Groups and the Companys objective is to maintain a balance between continuity of funding and flexibility through
the use of bank overdrafts, bank loans, finance leases and factoring contracts.

55
The table below summarises the maturity profile of the Groups financial liabilities as at 31 December 2010 and as at
31 December 2009 based on contractual undiscounted payments.
Group
Interest bearing loans
On
demand
Less than
3 months
3 to 12
months
1 to 5
years
More than
5 years
Total
22,533
12,902
53,371
112,995
201,801
343
1,231
2,382
3,956
Interest rate swaps
1,590
2,910
4,500
4,627
13,465
349
18,441
710
5,743
6,453
27,870
34,043
57,861
115,377
235,151
Trade payables
Balance as at
31 December 2010
1,673
34,401
72,656
190,951
3,906
303,587
557
2,651
1,898
5,106
Interest rate swaps
1,415
5,758
4,212
11,385
16,397
16,319
331
33,047
7,684
7,684
18,070
60,376
81,396
197,061
3,906
360,809
Trade payables
Balance as at
31 December 2009
As disclosed in more details in Note 25, as at 31 December 2010, the Company did not comply with the financial
indebtedness to EBITDA and interest service coverage ratio covenants set in the loan agreement with Swedbank, AB,
therefore the non-current bank loan were classified as current liabilities as at 31 December 2010 and are showed as
liabilities payable on demand in the tables above (for the Group) and below (for the Company).
The table below summarises the maturity profile of the Companys financial liabilities as at 31 December 2010 and 2009
based on contractual undiscounted payments.
Company
On
demand
Less than
3 months
3 to 12
months
1 to 5
years
More than
5 years
Total
22,491
22,491
89
138
57
284
547
1,257
190
282
2,276
30,119
2,049
1,036
70
738
34,012
710
551
1,261
53,867
3,946
1,364
409
738
60,324
5,270
9,045
19,352
29,605
3,906
67,178
96
441
285
822
775
874
1,649
Trade payables for the

subsidiaries
24,268
3,108
143
27,519
4,263
4,263
30,313
17,386
19,936
29,890
3,906
101,431

Trade payables for third
parties
Trade payables for the
subsidiaries
Balance as at
31 December 2010
Trade payables for third
parties
Balance as at
31 December 2009
56
Foreign exchange risk

Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Groups and the Companys exposure to the risk of changes in foreign
exchange rates relates primarily to the Group and Company operating activities (when revenue or expense are
denominated in a different currency from the Groups and the Companys functional currencies).
As a result of Group operations in Poland, the Groups balance sheet can be affected by movements in PLN/LTL
exchange rate. However currency translation risk from the translation of Poland subsidiaries financial statements to the
Group reporting currency were not taken into account in further disclosures.
The Group and the Company seeks to mitigate the effect of its structural currency exposure by keeping the assets and
the liabilities denominated in the same currency, which is the functional currency for each individual entity.
In June 2008 Jelfa SA loans from banks Bank Polska Kasa Opieki S.A. and Bank Zachodni WBK S.A. amounting to PLN
248,000 thousand (principal amount in original currency PLN 310,000 thousand) were converted to EUR (Note 27). In
order to hedge foreign exchange risk the subsidiary entered into a number of options agreements securing PLN
conversion to EUR at 3.8 PLN/EUR exchange rate at loan instalment day for all instalments due until August 2010.
Monetary assets and liabilities denominated in foreign currencies as at 31 December 2010 were as follows (in LTL):
Group
Company
Assets
Liabilities
Assets
PLN
24,159
32,958
USD
856
856
117
EUR
28,933
178,351
8,359
58,013
LTL
3,749
1,393
3,749
1,393
Other currencies
2,291
1,614
59,988
215,172
12,108
59,532
Total
Liabilities
Monetary assets and liabilities denominated in foreign currencies as at 31 December 2009 were as follows (in LTL):
Group
PLN
Company
Assets
Liabilities
Assets
Liabilities
27,038
32,710
1,990
USD
1,398
925
67
EUR
34,661
265,766
3,916
74,320
LTL
3,114
17,504
3,114
17,502
Other currencies
Total
1,668
2,339
933
67,879
319,244
7,030
94,812
The following table demonstrates the sensitivity to a reasonably possible change in the foreign exchange rates, with all
other variables held constant, of the Groups and Companys profit before tax (due to changes in the fair value of
monetary assets and liabilities), which also effects the Groups and the Companys equities and the Groups equity (due
to changes in the fair value of interest rate swaps). There is no impact on the Companys equity, other than current year
profit impact.
2010
Increase/
decrease
in forex
rate
Effect on
equity
Group
Group
LTL/PLN
+10%
(491)
PLN/EUR
+10%
(439)
LTL/PLN
-10%
PLN/EUR
-10%
439
2009
Effect on
equity
Company
Increase/
decrease
in forex
rate
Group
Group
Company
(491)
+10%
(1,439)
(1,439)
(10,430)
+10%
(1,069)
(17,824)
491
491
-10%
1,439
1,439
10,430
-10%
1,069
17,824

tax

tax

57
Credit risk
Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables)
and from its financing activities, which include foreign exchange transactions and other financial instruments.
The credit risk related to receivables is managed by each Group company separately trading only with recognised,
creditworthy third parties. According to the Groups and the Companys policy all customers wishing to trade on credit
terms are subject to credit verification procedures. For transactions that do not occur in the countries, where the Group
has affiliates, the Group and the Company does not offer credit terms without the approval of the Head of Commercial
operations and Chief Financial Officer. In addition, outstanding receivable balances are monitored on a weekly basis by
the Group management. For the justified cases, the sales are stopped or prepayment for deliveries is required. When
possible, factoring without a right to recourse is used as additional security mean for trade accounts receivable in country
of operation. The Group also uses credit insurance for domestic and export trade protecting its trade accounts
receivable. The Group does not hold collateral as security.
5 customers with the greatest outstanding receivable balances represented 43% of total Group receivables as at
31 December 2010 (45% as at 31 December 2009). The maximum exposure to credit risk at the reporting date is the
carrying value of the trade receivables, which is disclosed in Note 20.
With respect to credit risk arising from the other financial assets of the Group and the Company, which comprise other
financial assets, other receivables and cash and cash equivalents, the Groups and the Companys exposure to credit
risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
The Groups and the Companys principal financial instruments not carried at fair value are trade and other receivables,
trade and other payables, long-term and short-term borrowings.
Fair value is defined as the amount at which the instrument could be exchanged between knowledgeable willing parties
in an arm's length transaction, other than in forced or liquidation sale. Fair values are obtained from quoted market
prices, discounted cash flow models and option pricing models as appropriate.
The book value of the financial assets and financial liabilities of the Company and the Group as at 31 December 2010
and 2009 approximated their fair value.
The fair value of borrowings has been calculated by discounting the expected future cash flows at prevailing interest
rates. The fair value of loans and other financial assets have been calculated using market interest rates.
The following methods and assumptions are used to estimate the fair value of each class of financial instruments:
(a) The carrying amount of current trade accounts receivable, current trade accounts payable and short-term
borrowings approximates fair value.
(b) The fair value of non-current debt is based on the quoted market price for the same or similar issues or on the
current rates available for debt with the same maturity profile. The fair value of non-current borrowings with variable
and fixed interest rates approximates their carrying amounts.
Capital management
Capital includes total equity attributable to the shareholders of the Group and the Company. The primary objective of the
capital management is to ensure that the Group and the Company maintains a strong credit health and healthy capital
ratios in order to support its business and maximise shareholder value.
The Company and the Group manages its capital structure and makes adjustments to it, in light of changes in economic
conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders,
return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes
during the year 2010 and the year 2009.
The Group monitors capital using net financial debt to EBITDA ratio, which should not exceed 4. As at 31 December
2010 the ratio was equal to 1.96 (3.83 as at 31 December 2009).
The Company is obligated to upkeep its equity ratio not less than 50% of its share capital, as imposed by the Law on
Companies of Republic of Lithuania. There were no other externally imposed capital requirements on the Group and the
Company.

58
35. Related party transactions

The parties are considered related when one party has the possibility to control the other one or have significant
influence over the other party in making financial and operating decisions.
In 2010 and 2009 the Group and the Company had transactions and balances with the following related parties:
Amber Trust II (the shareholder of the Company);
Citigroup Venture Capital International Jersey Limited (the shareholder of the Company);
Invalda, AB (the shareholder of the Company);
Natural persons (the shareholders of the Company);
HBM Pharma s.r.o. (the ex-subsidiary of the Company);
Jelfa SA (the subsidiary of the Company);
Laboratorium Farmaceutyczne Homeofarm sp. z o.o. (the subsidiary of the Company);
Sanitas Pharma a.s. (the subsidiary of the Company);
Acena, UAB (the affiliate of Invalda, AB);
Baltic Amadeus Infrastrukturos Paslaugos, UAB (the affiliate of Invalda, AB);
Informatikos Pasaulis, UAB (the affiliate of Invalda, AB).
Finasta Imoniu Finansai, AB (the ex-affiliate of Invalda, AB);
FMI Finasta, AB (the ex-affiliate of Invalda, AB);
The Groups and the Companys transactions with related parties in 2010 and related year-end balances were as follows:
Sales to related
parties
Purchases from
related parties
Amounts owed
by related
parties
Amounts owed
to related
parties
322
964
3,351
3,842
2,166
33,941
Laboratorium Farmaceutyczne
Homeofarm sp. z o.o.
19
17
Sanitas Pharma a.s.
140
54
Amber Trust II
107
260
Citigroup Venture Capital

International Jersey Limited
345
345
Invalda, AB
351
870
Natural persons
64
147
Acena, UAB
32
Baltic Amadeus Infrastrukturos

Paslaugos, UAB
Informatikos Pasaulis, UAB
The Companys transactions

HBM Pharma s.r.o.
Jelfa SA
The Companys and the Groups

transactions
In 2010 the sales of goods to Jelfa SA amounted to LTL 227 thousand. Other sales to the subsidiary companies
represent the income from services, provided to the subsidiaries (mainly management consulting services).
Purchase of goods from Jelfa SA amounted to LTL 3,601 thousand, from HBM Pharma s.r.o. LTL 767 thousand, from
Laboratorium Farmaceutyczne Homeofarm sp. z o.o. LTL 19 thousand in 2010. Other purchases from the subsidiaries
relates to the services (mainly regulatory affairs from HBM Pharma s.r.o. and Sanitas Pharma a.s.).
There were no assets sales or acquisition to/from related parties in the Group and Company in 2010.

59
The Groups and the Companys transactions with related parties in 2009 and related year-end balances were as follows:
Sales to related
parties
Purchases from
related parties
Amounts owed
by related
parties
Amounts owed
to related
parties
2,747
4,654
17,204
13,396
2,580
14,846
Amber Trust II
153
2,512

International Jersey Limited
3,187
Invalda, AB
519
8,497
Natural persons
98
1,563
Acena, UAB
26
Baltic Amadeus Infrastrukturos

Paslaugos, UAB
21
Finasta Imoniu Finansai, AB
FMI Finasta, AB
24
The Companys transactions

HBM Pharma s.r.o.
Jelfa SA
Laboratorium Farmaceutyczne
Homeofarm sp. Z.o.o
The Companys and the Groups
transactions
In 2009 the sales of goods to Jelfa SA amounted to LTL 653 thousand. Other sales to the subsidiary companies
represent the income from services, provided to the subsidiaries (mainly management consulting services).
Purchase of goods from Jelfa SA amounted to LTL 1,216 thousand, from HBM Pharma s.r.o. LTL 3,416 thousand in
2009. Other purchases from the subsidiaries relates to the services (mainly regulatory affairs from HBM Pharma s.r.o.).
Purchases from Baltic Amadeus Infrastrukturos Paslaugos, UAB represents the acquisition of non-current assets.
Terms and conditions of transactions with related parties
Outstanding balances at the year-end are unsecured, interest free (except for loans) and settlement occurs in cash in
30 150 days term. There have been no guarantees provided or received for any related party receivable or payable.
For the year ended 31 December 2010 and 2009, the Company has not made any allowance for doubtful debts relating
to amounts owed by related parties. This doubtful debts assessment is undertaken each financial year through
examining the financial position of the related party and the market in which the related party operates.
Remuneration of the management and other payments
The management remuneration contains only short-term employee benefits. The Groups and the Companys
management remuneration amounted to LTL 903 thousand in 2010 (LTL 689 thousand 2009). In 2009 other payments
amounting to LTL 360 thousand (zero in 2010) for the Groups and the Companys management were accrued
additionally. In 2010 and 2009, the management of the Group and the Company did not receive any loans or guarantees;
no other payments or property transfers were made or accrued.

60
CONSOLIDATED ANNUAL REPORT
Period for which Consolidated Annual Report is prepared

1. Reporting period
Consolidated Annual Report is prepared for the year 2010.
Short presentation of Public limited liability company SANITAS Group

2. Main data about Public limited liability company SANITAS
Public limited liability company SANITAS (hereinafter SANITAS or Company)
Legal form
Public limited liability company
Registration date
June 30, 1994
Registration place
Kaunas Municipality Board
Register, in which data about the company are stored
Register of legal entities of Republic of Lithuania
Code
1341 36296
Registered office
Veiveriu str. 134 B, LT-46352 Kaunas, Lithuania
Phone number
+37037226725
Fax number
+37037223696
E-mail
sanitas@sanitasgroup.com
Website
www.sanitasgroup.com
3. Contacts of other enterprises of SANITAS Group

Jelfa SA (hereinafter Jelfa)
Legal form
Registration date
Code
Registered office
Phone number
Fax number
E-mail
Website
Limited liability company

December 2, 1991
National court register, Wroclaw branch
66687
Wincentego Pola str. 21, 58-800 Jelenia Gora, Poland
+48756433100
+48757524455
jelfa@sanitasgroup.com
www.jelfa.com.pl
Pharmaceutical Laboratory HOMEOFARM Sp. z o.o. (hereinafter Homeofarm)

Legal form
Registration date
December 12, 2002
National court register, Gdansk branch
Code
00001442971
Registered office
Janka Wisniewskiego str. 13, 81-335 Gdynia, Poland
Phone number
+48585533303
Fax number
+48585538947
E-mail
homeofarm@sanitasgroup.com
Website
www.homeofarm.pl
Sanitas Pharma a.s. (hereinafter Sanitas Pharma)
Legal form
Registration date
Code
Registered office
Phone number
Fax number
E-mail
Website

May 15, 2010
District court in Zilina, Slovakia
45 563 811
Bajkalska str. 5, 83104 Bratislava, Slovakia
+421244631899
+421244631899
sanitaspharma@sanitasgroup.com
-
4. Structure of SANITAS Group. Portfolios held
SANITAS is the sole shareholder of Jelfa. Jelfa is the sole shareholder of Homeofarm and Sanitas Pharma holding full
portfolios in these companies.
5. Affiliates and representative offices of enterprises comprising

SANITAS Group
Czech Rep.
Hungary
Bulgaria
Ukraine
Address:
Vasylkivska str. 1,
building 2, office
207,
03040 Kiev
Russia
Address:
Mezi vodami 639/27,
14000 Prague 4
Modrany
Address:
Nagy Lajos Kirly
tr 5. 3/14, H-4032
Debrecen
Address:
Nikolay Kopernik str.
21, entr. B, fl . 4, flat
10, 1111 Sofia
Tel:
+420 225 153 026
Fax:
+420 225 152 004
Tel / Fax:
+36 52 785 421
Tel / Fax:
+359 2 979 94 10
Tel / Fax:
+38 044 461 91 96
Tel / Fax:
+7 495 510 28 79
E-mail:
office.cz@
sanitasgroup.com
E-mail:
office.hu@
sanitasgroup.com
E-mail:
office.bg@
sanitasgroup.com
E-mail:
office.ua@
sanitasgroup.com
E-mail:
office.ru@
sanitasgroup.com
Address:
Korovyi Val 7 of. 80,
119049 Moscow
Manufacturing Facilities
Sanitas Pharma Affiliate Office
Jelfa's Representative Offices
Other Group Locations

CONSOLIDATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2010
63
6. The main activity of SANITAS Group

The main activities of SANITAS Group are:
manufacture and sale of various generic medicine;

development of new products;
toll manufacturing.
7. Participation in activity of organizations

SANITAS is a member of Lithuanian Association of manufactures of medicines and Lithuanian Association of trade
numbers and barcodes.
8. Short history of SANITAS Group

History of SANITAS Group reaches as early as 1922, when pharmaceutical laboratory Sanitas was established in
Kaunas city (Lithuania) and used to manufacture cosmetics. In the course of time, the laboratory was intensely
developed, its owners were changing. History of the present SANITAS started in 1994, after privatization of the
Company. Manufacture was reformed according to the requirements of Good Manufacturing Practice (hereinafter GMP)
and developed further.
In May 2004, SANITAS acquired shares of another Lithuanian manufacturer of pharmaceutical preparations
Endokrininiai preparatai, AB. In spring 2005 in the territory of this company, at Veiveriu str. 134, Kaunas, according to
project Modernization of manufacture of public limited liability company SANITAS, which was partially financed by
Structural Funds of the European Union, building of new modern factory of medicine manufacture was started. Project
was finished in September 2008. The newly installed equipment increased capacities of manufacture and expanded
assortment completely new lines of eye drops and disposable syringes were installed.

64
In July 2005, SANITAS acquired manufacturer of generic medicines, limited liability company HBM Pharma s.r.o
(previously known as Hoechst- Biotika s.r.o) (hereinafter HBM), established in Martin city, Slovakia. Acquisition of HBM
was the first step to creation of SANITAS Group and at the same time strong step into markets of the Central Europe. At
the end of 2006 HBM established office in Prague, Czech Republic, which later was re-registered to affiliate.
In 2006, SANITAS went through a life-transforming transaction when it acquired Jelfa in Poland, a company several
times larger than SANITAS was at the time. Jelfa was well established in Poland, had world class production facilities,
including one of the largest ointment plants in Europe but was in need of modernisation, particularly in terms of its
product portfolio and culture. Over the subsequent few years, Jelfa has been integrated into SANITAS Group and been
transformed from a production-oriented company to a modern market-oriented pharmaceutical company focused on
improving the health and well being of patients. The acquisition of Jelfa added over 100 formulations to SANITAS
products offering as well as giving the Group a significant presence in Poland, Russia, Ukraine and the wider region.
The acquisition of Jelfa was partly financed by an issuance of new shares by SANITAS, which led to international private
equity funds CVCI (Citigroups private equity unit focusing on developing markets) and Amber Trust (Baltic-focused
private equity fund managed by Danske Capital and Firebird LLC) becoming shareholders of the company.
Over the last few years, SANITAS Group has been expanding its footprint in Central and Eastern Europe. The Group
established its own presence in Hungary and Bulgaria in 2005, and Czech and Slovakia in 2007.
On 23 December 2008 Jelfa acquired 100% stock of shares of Homeofarm, a niche dermatology / dermacosmetics
company based in Gdansk, northern Poland. This acquisition has complemented the Group assortment and pipeline in
this segment, consolidating the Group position as one of the leading dermatology players in Poland and the region.
On 27 April 2010 the agreement on sale of HBM was signed between SANITAS and Latvian company SIA Liplats 2000.
The parties agreed only on sale of manufacturing site located in Martin. Marketing, sales and regulatory divisions located
in Bratislava and Prague were separated from HBM and transferred to newly established HBM subsidiary Sanitas
Pharma. On 16 June 2010 SANITAS subsidiary Jelfa acquired 100% of Sanitas Pharma shares. The transaction on sale
of HBM between the Company and Latvian company SIA Liplats 2000 was closed on 8 July 2010.
65
Today SANITAS Group is a fully modernised, patient and doctor-oriented organisation based in the European Union,
which develops, registers, manufactures and sells a comprehensive portfolio of branded generic and specialty
pharmaceuticals. In its core therapy areas SANITAS Group services specialists in Poland, Russia and the wider Central
and Eastern European region with its own field force of over 250 experienced medical representatives.
9. Aims. Values
SANITAS Group aims to be a leading player in its strategic therapeutic areas by offering a comprehensive portfolio of
treatments and formulations.
Key values are:
Quality;
Integrity;
Innovation;
Local knowledge;
Customer focus;
Value.
Information on SANITAS Authorised Capital and Securities

10. Composition of SANITAS authorised capital, rights granted by shares
Type of shares
Number of
shares
Nominal
value, LTL
Total nominal
value, LTL
Portion of the
authorised
capital, %
Voting rights
granted
Ordinary
registered
shares
31,105,920
31,105,920
100
1 share grants
1 vote
SANITAS shares grants the following property and non-property rights to the shareholders:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
To receive a part of the Companys profit (dividends);

To receive a part of assets of the Company in liquidation;
To receive shares without payment if the authorised capital is increased out of the Company funds except in cases
provided in the Law on companies of the Republic of Lithuania;
To have pre-emption right in acquiring shares or convertible debentures issued by the Company, except in cases
when the General Shareholders Meeting decides to withdraw the pre-emption right for all the shareholders,
according to the Law of companies of the Republic of Lithuania;
To lend to the Company in the manner and procedure prescribed by law;
To leave all or part of the shares for the other persons by will;
To sell or otherwise transfer the shares to the proprietorship of other persons;
To attend the General Shareholders Meetings;
To vote at the General Shareholders Meetings (1 fully paid share of one Litas nominal value grants 1 vote);
To receive the information concerning economic activity of the Company, following the order set by the Articles of
Association;
To file a claim with the court for reparation of damage resulting from nonfeasance or malfeasance by the General
Manager and Management Board members of their obligations prescribed by the laws and the Articles of
Association as well as in other cases laid down by laws;
To receive funds of the Company in cases when the authorised capital of the Company is reduced for the purpose of
disbursement of funds of the Company to the shareholders;
To submit the questions related to the agenda of the General Shareholders Meeting to the Company in advance;
To authorize natural or legal person to represent his interests in relations with the Company and other persons;
Shareholders may exercise other property and non-property rights.
The obligations of SANITAS shareholders do not differ from the one set in the Law on companies of the Republic of
Lithuania, except cases specified in the Articles of Association of the Company.

66
11. SANITAS own shares

During the reporting period SANITAS did not acquire and did not transfer or held its own shares. Jelfa, Homeofarm and
Sanitas Pharma nor other persons acting under authorization of SANITAS subsidiaries did not acquire and did not hold
SANITAS shares.
12. Dividends paid to SANITAS shareholders

The General Shareholders Meeting decides upon dividends payments and sets amount of dividends. Persons have a
right to get dividends if they are the shareholders of the Company at the end of rights accounting day or have the right to
get dividends on other legal grounds at that day. For the financial year 2009 or 2008 the Company did not pay any
dividends. For the financial year of 2007 the Company declared LTL 18,664,000 dividends (0.6 LTL per ordinary
registered share).
13. Data about securities trading

Only shares of SANITAS are traded on regulated market. Since 21 November 2005, the ordinary registered shares of the
Company were admitted to the Baltic Main List of NASDAQ OMX Vilnius AB (hereinafter NASDAQ) i.e. previously known
as Vilnius Stock Exchange. Until 21 November 2005 the Companys shares were traded on the Current List of NASDAQ.
Main characteristics of the Companys shares listed in the Baltic Main List:
ISIN code
Ticker
Number of
shares
Nominal
value, LTL
Total
nominal
value, LTL
Voting rights
granted
LT0000106171
SAN1L
31,105,920
31,105,920
1 share
grants 1 vote
Type of
shares
Ordinary
registered
shares
Main information about Companys security trading during last five years is as follows:
2010
2009
2008
2007
2006
Opening price, EUR
2.760
2.517
8.399
3.939
4.055
Highest price, EUR
6.024
3.331
10.122
10.542
4.924
Lowest price, EUR
2.731
1.767
2.027
3.765
3.562
Last price, EUR
5.496
2.760
2.517
8.660
3.939
Average price, EUR

Traded volume
4.212
2.418
6.329
5.762
4.093
861,185
1,477,584
1,267,264
3,204,531
3,204,531
3.75
3.57
8.02
18.46
6.00
170.96
85.85
78.29
269.37
122.52
Turnover, million EUR

Capitalisation, million EUR
14. SANITAS shareholders

Total number of the shareholders as at 31 December 2010 was about 1,679 (as at 31 December 2009 - 1,586; as at 31
December 2008 1,492). The summary of the shareholders by type as at 31 December 2010, 2009 and 2008 is as
follows:
2010
60%
2009
59%
2008
27%
27%
39%
Investment and pension funds
41%
Legal entities
Natural persons
12%
10%
3%
12%
2%
8%
Banks and insurance companies

67
The summary of the shareholders by geographical location as at 31 December 2010, 2009 and 2008 is as follows:
2010
41%
38%
13%
6%
2009
42%
37%
13%
6%
13%
6%
2008
57%
Lithuania
Channel islands
22%
Luxemburg
Estonia
Other countries
Shareholders, who held more than 5% of the Companys authorised capital or votes by the right of ownership or acting jointly
with other shareholders as at 31 December 2010:
Share of votes, %
Name of the shareholder
(legal form, address of
registered office and code
of the enterprise)
Number of
ordinary
registered
shares
owned by the
right of
ownership
Share of the
authorised
capital, %
Invalda, AB, Seimyniskiu str.

1A , Vilnius, c. 121304349
7,390,042
5,461,260

International Jersey Limited,
26 New street, St. Helier JE2,
Channel islands, c. 90207
Baltic Pharma Limited,
Ugland house, South Church
str., George town, c. 218089
Amber Trust II S.C.A, 8-10
me Mathias Hardt, L-1717,
Luxembourg, c. B103.888
Share of
votes given
by the shares
owned by the
right of
ownership, %
Indirectly
owned
votes, %
Share of
votes directly
and indirectly
held by
shareholders
that are
acting
jointly, %
23.76
23.32
3.21
26.53
17.56
17.56
37.86
6,314,502
20.30
20.30
4,003,147
12.87
12.87
15. Limitations of SANITAS securities transferring

On 12 January 2009 shareholders agreement between Amber Trust II SCA, Citigroup Venture Capital International
Jersey Limited, Baltic Pharma Limited, Invalda, AB, Darius Sulnis, Tomas Nauseda, Jonas Bielinis, Nerijus Nauseda,
Arunas Tuma, Alvydas Dirvonas, Darius Zaromskis, Donatas Jazukevicius and the Company (hereinafter Shareholders
agreement) was signed. It prescribes restrictions to some of Shareholders agreement parties to transfer Sanitas shares,
other than as permitted under the Shareholders agreement.
16. Special rights of control possessed by the SANITAS shareholders and

description of these rights
In the Shareholders agreement it is agreed that each of the shareholders Amber Trust II SCA, Baltic Pharma Limited and
Citigroup Venture Capital International Jersey Limited are entitled to elect 1 representative to the Companys managing
body the Management Board.
17. Limitations of Companys shareholders voting rights

Shareholders agreement establishes a requirement not to initiate and not to vote for the amendments of Articles of
Association resulting in change of number of members of the Management Board. There are no other limitations for
SANITAS shareholders voting rights known to the Company. Since the signing of Shareholders Agreement group of
shareholders acting in concert terminated.

68
18. SANITAS shareholders agreements known to the Company according to

which transferring of the securities and/or voting rights can be limited
No other agreements, except Shareholders agreement are known to the Company.
19. SANITAS agreements with intermediaries of public trading in securities

The Company has agreement with FMI Finasta, AB on the management of shares accounting, custody and accounting
of securities and funds, accepting and executing orders.
20. The changes of SANITAS share price and turnover

10
400
350
300
250
200
5
4
150
3
100
50
2008.01
2008.04
2008.07
2008.10
2009.01
Average Price, EUR
2009.04
2009.07
2009.10
2010.01
2010.04
2010.07
2010.10
Turnover, thEUR
Source: http://www.nasdaqomxbaltic.com
21. The changes of SANITAS share price and of NASDAQ indexes

120%
110%
100%
90%
80%
70%
60%
50%
40%
30%
20%
2008.01
2008.04
2008.07
OMX Vilnius
2008.10
2009.01
2009.04
2009.07
OMX Baltic Benchmark PI
2009.10
2010.01
2010.04
OMX Health Care PI
2010.07
2010.10
SAN1L
Source: http://www.nasdaqomxbaltic.com

69
Information on SANITAS Management

22. Companys managing bodies
The Company has the General Shareholders Meeting, single person managing body the Manager (the General
Manager) and collegial executive body the Management Board. The Supervisory Board is not formed in the Company.
22.1. The Management Board
The Management Board is formed from 5 members and is elected by the General Shareholders Meeting for the 4 years
period. The Management Board has all powers and authority provided under the applicable laws and which are normally
appropriate for the Management Boards in practice, including the competence to decide on the following issues:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
A material change in the business of the Company;

Any merger, consolidation or acquisition, or sale, lease or other disposal of the Company, or all or substantially all of
the Companys assets;
The establishment of any new subsidiary of the Company;
Any joint ventures between the Company and another entity;
Any transaction giving rise to contingent liabilities not provided in the budget in excess of EUR 250,000 (two
hundred fifty thousand);
A sale of any subsidiaries of the Company or of all or substantially all the assets of any of the Companys
subsidiaries;
Approval of the Companys annual operating plan and budget and any material deviation there from;
Capital expenditure in excess of EUR 250,000 (two hundred fifty thousand) not provided in the budget, in one
transaction or a series of transactions during any year;
Sale of assets of the Company with a book value in excess of EUR 250,000 (two hundred fifty thousand) not
provided in the budget in one transaction or a series of transactions during any year;
Borrowings in excess of EUR 250,000 (two hundred fifty thousand) not provided in the budget in one transaction or
a series of transactions during any year and the establishment of any mortgage, pledge or lien over any asset of the
Company where the book value of the asset exceeds EUR 250,000 (two hundred fifty thousand);
Any transaction with any officer, Management Board member or other interested party, or close relatives of any such
interested party;
Any transaction with a shareholder or close relatives of a shareholder;
The constitution of any committee of the Management Board or the Management Board of any subsidiary of the
Company;
Any transaction not in the ordinary course of business;
Any change in the signatory rights on behalf of the Company;
Appointment or change of the General Manager and the Chief Financial Officer;
Payment to any employee of remuneration in excess of EUR 50,000 (fifty thousand) (after tax) in any one year;
Other decisions prescribed to the competence of the Management Board of the Company provided under the
applicable laws, resolutions of the General Shareholders Meeting or Articles of Association.
The Management Board elects and removes the Manager of the Company, fixes his remuneration, other terms of
employment contract, approves his office regulations, assigns to him incentives and penalties. An employment contract
with the Manager of the Company on behalf of the Company is signed by the chairman of the Management Board or
other member authorized by the Management Board.
Decisions made by the Management Board is considered as lawful if more than a half of the all elected Management
Board members vote in favour of it, except for the matters referred to in clauses 3 5, 7 9, 10 11, 13 15, 17 above
requiring qualified majority of 3/5 (three fifths) of the Management Board members attending the Management Board
meeting and for matters referred to in clauses 1 2, 6, 12 and 16 above, requiring more than 4/5 (four fifths) majority
vote of the Management Board members attending the Management Board meeting.
Election and revocation order of the Management Board does not differ from the order set in the Law on companies of
the Republic of Lithuania. Rules of election and replacement of the members of the Companys Management Board and
other issues related to the work of the Management Board are specified in SANITAS Management Board Work
Regulations. The latest version of SANITAS Management Board Work Regulations was approved by the Management
Board on 28 April, 2009.

70
22.2. The Manager

The General Manager is elected and dismissed by the Management Board. The competence of the General Manager
does not differ from that set in the Law on companies of the Republic of Lithuania. The General Manager has a right to
issue an authorisation for the employee of the Company or the third person, following the Lithuanian legal order, to
perform the legal actions related to the activity of the Company on its behalf and in its name.
22.3 The General Shareholders Meeting
The competence of the General Shareholders Meeting and the order of its convocation do not differ from that set in the
Law on companies of the Republic of Lithuania, except cases specified in SANITAS Articles of Association. The General
Shareholders Meeting has an exclusive right to adopt the following resolutions regarding:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Amendment to the Articles of Association of the Company;

Amendment to the rights associated with any of the shares of the Company;
Issuance of bonds and debentures, including convertibles;
Issuance of new equity or capital, including shares, rights, options, warrants to purchase shares (or other convertible
or quasi-equity securities), provided each shareholder has a pre-emptive right to subscribe for the newly issued
shares or rights;
De-listing of the shares, new public listing of the shares on any stock exchange;
Any reduction, repayment or buyback of the shares of the Company or any shares of its subsidiaries;
Declaration and payment of any dividends or other distributions;
Liquidation, dissolution or winding up of the Company including appointment of the liquidator;
Appointment and change of the audit company for the Company, establishment of payment conditions for audit
services;
Approval of the set of annual financial accounts and the report on the Companys operation, including the report of
the Management Board;
Issuance of shares or other securities under the employee stock option plan and its rules and regulations, and any
other future stock option or incentive plans as approved by the Management Board;
Decisions on the reorganization, transformation or restructuring of the Company;
Decision to revoke for all the shareholders the pre-emptive right in acquiring the shares or convertible debentures of
the Company of a specific issue;
Other decisions prescribed to the competence of the General Shareholders Meeting of the Company provided under
the applicable laws.
A decision is deemed to be adopted by the General Shareholders Meeting when more shareholders vote in favour of it
than against it except for the following cases: adoption of decisions under clauses 3 7 and 9 12 above require a 2/3
(two thirds) majority vote, whilst adoption of decisions under clauses 1 2, 8 and 13 require a 5/6 (five sixths) majority
vote of the shareholders present in the General Shareholders Meeting.
22.4. SANITAS Audit Committee
The Audit Committee consists of 4 members, 1 of them is independent. The term of office of the Audit Committee
coincides with the term of office of the Management Board. Members of the Audit Committee are elected by the General
Shareholders Meeting at the proposal of the Management Board. The main functions of the Audit Committee are:
1. To provide the Management Board of the Company with recommendations related to selection, repeated
appointment and cancellation of an external audit company as well as the terms and conditions of the agreement with
the audit company;
2. To observe the process of carrying out an external audit;
3. To observe how the external auditor and audit company follow the principles of independence and objectivity;
4. To observe the process of preparation of financial reports of the Company;
5. To observe the efficiency of systems of internal control, risk management and internal audit, if such functions exist in
the Company. Should there be no internal audit authority in the Company, the need for one should be reviewed at
least annually;
6. To review efficiency of external audit process and responsiveness of management of the Company to
recommendations and remarks made in the external auditors management letter;
7. To fulfil other functions specified in the legal acts of the Republic of Lithuania and the recommendations of the Code
of management of companies listed with NASDAQ.
The Audit Committee is a collegial body, taking decisions during meetings. The Audit Committee may take decisions and
its meeting is considered as valid, when at least 3 (three) members of the Audit Committee participate in it. The decision
is passed when at least 3 (three) of the participating members of the Audit Committee vote for it.

71
23. Data about members of the Management Board, members of the Audit
Committee, Managing and Finance Directors
Ashwin Roy
Chairman of the Management Board
Education: Master degree in Economics (First Class) from King's College, University of Cambridge, UK; UK qualified
Chartered Accountant.
Work experience: PricewaterhouseCoopers, London, UK Assistant Manager, Audit and Transaction Support
(1996-2000); Societe Generale Asset Management, London & Paris Fund Manager (2000 2001).
Participation in the activity of other companies:
Name of organization, position taken
Shares held in other

companies (more than 5 %)
Citi Venture Capital International Director;
Eurasian Brewery Holdings Limited (Jersey, English islands) Director;
Silja Line Oy (Finland) - Member of the Supervisory Board;
AS Tallink Grupp (Estonia) - Member of the Supervisory Board;
Huvepharma AD (Bulgaria) Director.
Darius Sulnis
Member of the Management Board
Education: Master degree of faculty of Economics, Vilnius University.
Work experience: FMI Finasta, AB Director (1994 2002); Invalda Real Estate, UAB (current name of the
company Invalda Nekilnojamojo Turto Valdymas, UAB) Director (2002 2006).
Invalda, AB Member of the Management Board, President;

5.7% of authorized capital,
7.88% of votes, with persons
acting in concert 26.85% votes
Invaldos Nekilnojamojo Turto Fondas, AB Member of the Management Board;
Vilniaus Baldai, AB Member of the Management Board;
SIA Dommo (Latvia) Chairman of the Supervisory Board;
SIA Dommo Grupa (Latvia) Chairman of the Supervisory Board;
SIA Burusula (Latvia) Chairman of the Supervisory Board;
Umega, AB Member of the Management Board;
Tiltra Group, AB Member of the Supervisory Board;

Golfas, UAB;
Lucrum Investicija, UAB.
31.00
100.00 (all voting rights are
transferred)

72
Martynas Cesnavicius
Education: Banking and finances, faculty of Economics, Vilnius University.
Work experience: Pemco Kuras, UAB Financial Controller (1996 1998); Moller Invest General Manager
(1998 2003); Vilnius Audi Center Director (2002 2003).

Laisvas Nepriklausomas Kanalas, UAB Member of the Management Board;
Litagra, UAB Member of the Management Board;
Atradimu Studija, UAB Member of the Management Board;
31.00
Profinance, UAB;
50.00
Amilina, AB Member of the Management Board;
Premia KPC, AB Member of the Management Board;
Snaige, AB Chairman of the Management Board;
Meditus, UAB Member of the Management Board;
Malsena Plius, UAB Chairman of the Management Board;
TEO, AB Member of the Management Board, Member of the Audit Committee;
Amber Trust II S.C.A Advisor.
Tomas Nauseda
Education: Master degree in Finance, Concordia University, Wisconsin (USA).
Work experience: JSC Guaranty Bank, USA Loan Manager (1999); Dujasta, UAB Development Director (2000).

Baltvesta, UAB;
33.00
Sirijus, UAB;
50.00
Umega, AB;
Lauko reklamos tinklas, UAB;
7.83
30.00
Aikstentis, UAB;
8.00
Siryjo lines, UAB;
30.63
Investita, UAB;
33.00
BFVG nekilnojamas turtas, UAB;

TNJ investments, UAB.
33.00
100.00

73
Martin Oxley
Education: Edinburgh University, M.A (Honors) Modern Languages & Philosophy; Social history; A levels: French,
German, History, Business studies.
Work experience: GlaxoSmithKline Commercial Director; Bristol-Mayers Squibb Country Manager; Polpharma
President; Pliva Krakow President.

British Polish Chamber of Commerce General Manager;
Fundacja FIT President.
Alina Naujokaitiene
Chairman of the Audit Committee
Education: Master degree in Commercial Law, Vytautas Magnus University.
Work experience: Office of bailiff Lina Ugne Dzikiene Lawyer, Bailiffs Assistant (2006 2007).
SANITAS Lawyer.

-

74
Algirdas Valancius
Independent member of the Audit Committee
Education: Bachelor degree in International Business Management, Master degree in Business Administration, with a
speciality in Finance Management, Kaunas University of Technology.
Work experience: Arthur Andresen, UAB Audit assistant, Audit senior, Senior business consultant, (1998 2000);
Glass factory Aleksotas, AB Finance Director (2003); Concern SBA, UAB Finance director, Internal Audit Director
(2003 2007).

Aibes Mazmena, UAB Finance Director;
Aibes Logistika, UAB Member of the Management Board.
Raimondas Rajeckas
Member of the Audit Committee
Education: Bachelor degree in Business Management, Master degree in Accounting and Audit, Vilnius University.
Work experience: Invalda, AB Accountant (1998 2000); Gildeta, AB Accountant (2000 2002); Invaldos
Nekilnojamojo Turto Valdymas, UAB Finance Director (2000-2001); Galincius, AB Finance Director (2001);
Valmeda, AB Finance Director (2001-2006); Kelioniu Viesbuciai, UAB Finance Director (2004-2006).

Invalda, AB Chief Accountant;
Aktyvo, UAB Director;
Investiciju tinklas, UAB Director;
Aktyvus valdymas, UAB Director;
Fortina, UAB Director;
Finansu rizikos valdymas, UAB Director;
Iniciatyvos fondas VsI Director;
MBGK, UAB Director;
MGK Invest, UAB Director;
Rovelija, UAB Director;
RPNG, UAB Director;
Regenus, UAB Director;
Invetex, AB Chief Accountant, Chairman of the Management Board.

75
Kustaa Aima
Member of the Audit Committee
Education: Master degree in Economics, Helsinki University.
Work experience: Bankers BBL, Finland Director (1998 2003); Danske Capital, Finland Director (2000 2009).

Amber Trust Management SA (Luxembourg) Vice Chairman of the Management

Board;
Amber Trust II Management SA (Luxembourg) Chairman of the Management

Board;
Kaima Capital OY (Finland) Managing Director;
100.00
Kaima Capital Eesti O (Estonia) Member of the Management Board;
100.00
DCF Fund II SICAV SIF (Luxembourg) Chairman of the Management Board;
Cumulant Capital Fund Management Oy (Finland) Member of the Management

Board;
Litagra, UAB Member of the Management Board;
BAN Insurance (Latvia) Deputy Chairman;
SALVA Insurance (Estonia) Member of the Supervisory Board;
Premia Foods (Estonia) Member of the Supervisory Board;
AS Tallink Group (Estonia) Member of the Supervisory Board;
Tallink Silja Oy (Finland) Member of the Management Board;
AS PKL (Estonia) Member of the Supervisory Board.
KJK Capital OY (Finland) Managing Director, Chairman of the Management

Board;
KJK Management SA (Luxembourg) Chairman of the Management Board;
AS Baltika (Estonia) Member of the Supervisory Board.
Saulius Jurgelenas
General Manager
Education: Faculty of Economics, Vilnius University.
Work experience: Vilnius Consult Financial Consultant; Kraitene, UAB Finance Director, Managing Director;
Endokrininiai preparatai, AB Managing Director.

Jelfa Chairman of the Supervisory Board;
Sanitas Pharma Member of the Supervisory Board.

76
Nerijus Drobavicius
Education: Bachelor degree in Business Administration; Master degree in Banking and Finance,
Vytautas Magnus University.
Work experience: Arthur Andersen; Danske bankas UAB (previously known as Sampo bankas, UAB).

Jelfa Member of the Management Board.
Participation in SANITAS authorised share capital as at 31 December 2010:

Name, surname
Position held
Portion of the capital

and votes held, %
Management Board
Ashwin Roy
Chairman
Tomas Nauseda
Member
0.08
Member
Martin Oxley
Member
Darius Sulnis
Member
0.79*
Chairman
Audit Committee
Alina Naujokaitiene
Algirdas Valancius
Independent member
Member (since 12.10.2010)
Member
Member (until 14.06.2010)
0.003
Saulius Jurgelenas
General Manager
Nerijus Drobavicius
Raimondas Rajeckas
Kustaa Aima
Mindaugas Lankas
Administration
* Management Board member Darius Sulnis held only voting rights, shares were lended out.

77
Beginning and end of the term of office of members of the Management Board and members of the Audit Committee:
Name, surname
Beginning of the term in office
End of the term in office
Darius Sulnis
28.04.2010
2014
Tomas Nauseda
28.04.2010
2014
28.04.2010
2014
Martin Oxley
28.04.2010
2014
Ashwin Roy
28.04.2010
2014
Alina Naujokaitiene
28.04.2010
2014
Algirdas Valancius
28.04.2010
2014
Raimondas Rajeckas
12.10.2010
2014
Kustaa Aima
28.04.2010
2014
Mindaugas Lankas
28.04.2010
14.06.2010
Management Board
Audit Committee
Data about cash payments, other transferred property and given warranties jointly to all members of the Management
Board, members of the Audit Committee, members of administration and average extent belonging to each member of
the collegial bodies and administration during the reporting period:
Remuneration, LTL
Tantiemes, other
payments made
from profit, LTL
Other transferred
property
Members of the Management Board jointly
Each member of the Management Board

(average)
Members of the Audit Committee jointly
46,590*
Each member of the Audit Committee

(average)
23,295*
Members of Administration (General

Manager and Chief Financial Officer)
jointly
902,854
Each member of Administration (average)
451,427
* Chairman of the Audit Committee Alina Naujokaitiene was paid salary as SANITAS lawyer. Average amount of
remuneration for each member of the Audit Committee was paid for one member of the Audit Committee.

78
SANITAS group activity review

24. Non-financial activity review
24.1. Manufacturing
SANITAS Group produces medicines in various drug forms:
Sterile medicine products which are packed in ampoules (solutions in ampoules, suspensions and lyophilised
products);
Tablets and capsules (non-coated tablets, film coated tablets, sugar coated tablets and capsules;
Semisolids drug forms which are packed in tubes (ointments, creams, gels, lotions, emulsions);
Eye drops.
SANITAS Group annual production capacities:
Injectables (ampoules, vials, syringes) 150 million;

Solid forms 1,350 million units;
Ointments (tubes) 50 million;
Eye drops 15 million.
In 2010 Kaunas manufacturing site, after receiving GMP certificates in 2009, was in full operation, manufacturing all
transferred products and starting new projects with new contractors.
Production of SANITAS manufacturing site:
Product
2008
2009
2010
Sterile medicine products in ampoules
18.2 million
3.0 million
13.3 million
Tablets and capsules
58.9 million
30.0 million
61.0 million
0.07 million
0.5 million
Eye drops
In 2010 Jelfa continued production and focused on gathering new potential projects. Jelenia Gora manufacturing site
pasted FDA audits in ampoules department and standard audits performed in other manufacturing departments.
Production of Jelfa:
Product
2008
2009
2010
70.0 million
56.0 million
51.2 million
644.0 million
574.0 million
588.2 million
32.1 million
21.6 million
23.8 million

Semisolids drug forms in tubes
79
On 8 July 2010 transaction on sale of SANITAS subsidiary HBM was closed. By this transaction manufacturing site
located in Martin, Slovakia was divested.
Production of HBM:
Product
2008
2009
2010*
51.5 million
51.6 million
23.7 million
263.0 million
181.0 million
115.7 million
0.25 million

Semisolids drug forms in tubes
* Production of the half year.
24.2. Employees and human resources policy
24.2.1. Human resources policy
SANITAS Group has unified human resources (hereinafter HR) policy. General rules of this policy are applied in all
companies of SANITAS Group.
HR motivation and management rules applied in SANITAS Group companies are:
Structural remuneration system, which consists of regularly revised salary, which is set according to data presented by
international research company and bonus for individual performance. System assures, that salary paid for the employee
correspond with the salary level on the market. Regular evaluation of the targets performance allows measuring each
employee contribution to the overall result of the business. The system motivates the employees to achieve the set
targets and stimulates their initiative while solving the problems and presenting the suggestions. This system is applied
in SANITAS since 2009 and in Jelfa since the beginning of 2010.
Managers motivation, i.e. a new management incentive scheme Phantom Share Option Plan (hereinafter Plan), which
was approved by SANITAS General Shareholders Meeting on 9 October, 2009, taking into consideration the worldwide
best practice of the pharmaceutical companies. According to the Plan, certain monetary compensation will be paid to the
top and middle management of the Company and its subsidiaries after the sale of the Companys shares by certain
shareholders of the Company. Therefore it is expected that the proposed Plan will attract, retain and reward managing
employees as well as strengthen the alignment of interests between the Companys shareholders and its management.
Communication cooperation between SANITAS Group employees gives them the international experience and allows
them to apply this experience in everyday activities. Routine work targets for all SANITAS Group employees require
teamwork with the colleagues in foreign countries, that is why the employees have to have higher communicational skills
and wider professional knowledge. In order to strengthen the formation of general organisational culture and to keep
certain communication level in SANITAS Group companies, the informational bulletin InSanitas is being issued.
Social guarantees and support for the employees: the trade unions are acting in SANITAS and Jelfa, collective
agreements are also signed. Additional social payments on jubilees and loss of relatives are paid according to SANITAS
collective agreement. Jelfas collective agreement sets some guarantees on keeping employees working place, i.e.
some of Jelfas employees have additional employment guarantees for 3, 7 or 10 years. Jelfa is obliged to pay certain
payouts for the employees, who have worked for certain number of years according to its collective agreement.
Training policy the particularity of SANITAS Groups activity and GMP requirements obliges to create and improve the
internal trainings system, based on transferring the professional experience and skills. The employees in the majority of
the positions in manufacturing, technical support, supply chain, regulatory affairs and quality control departments have to
have specific professional knowledge, which is not possible to acquire in educational institutions. This knowledge is
transferred from one employee to the other through internal trainings and practical work. SANITAS Group companies
organise work safety courses, including knowledge on safe work with equipment, first aid and hygiene skills, etc.
Modern technical base, i.e. new and modern equipment, which are used in SANITAS Group companies not only assure
easier work performance, but also reduce the number of accidents at work and risk of professional diseases.

80
24.2.2. Employees statistics

130 employees worked at SANITAS on 31 December 2010, number of employees decreased by 1 comparing with 31
December 2009 and by 59 comparing with 31 December 2008. Total SANITAS Group headcount decreased by 264
employees in comparison with 31 December 2009 and by 437 in comparison with 31 December 2008.
Reduction of SANITAS Group headcount in 2010 was basically influenced by divestment of SANITAS Slovak subsidiary
HBM on 8 July 2010 (244 employees worked in HBM as of 30 June 2010). Sales, marketing and regulatory divisions in
Slovakia and the Czech Republic together with their employees (42) were separated from HBM and transferred to
Sanitas Pharma prior to the divestment. Reduction of SANITAS group and the Company headcount in 2009 was
influenced by headcount optimisation process. As a result, mutual basis agreements for employment termination were
signed with some of the employees. The headcount changes were planned and controlled.
Headcount in SANITAS Group companies as at 31 December 2008, 2009 and 2010:
2008
2009
2010
SANITAS
189
131
130
HBM*
345
287
Jelfa
994
936
929
17
18
Homeofarm
Sanitas Pharma
41
1,545
1,372
1,108
2008
2009
2010
SANITAS
192
160
129
HBM
347
316
Jelfa
938
965
931
17
18
13
Total
* SANITAS subsidiary until 08.07.2010
Average headcount in SANITAS Group companies in 2008, 2009 and 2010:
Homeofarm
Sanitas Pharma
Total
41
1,477
1,459
1,114
Summary of employees by levels of positions as at 31 December 2008, 2009 and 2010 is as follows:
SANITAS
SANITAS Group
2008
2009
2010
2008
2009
2010
Top managers
10
25
23
29
Specialists
82
67
69
791
724
566
Workers
97
56
53
729
625
513
189
131
130
1,545
1,372
1,108
Total

81
Summary of employees by education as at 31 December 2008, 2009 and 2010 is as follows:

SANITAS
SANITAS Group
2008
2009
2010
2008
2009
2010
University education
77
74
72
621
609
565
College education
39
23
23
525
445
304
Secondary education
72
34
35
389
312
239
10
189
131
130
1,545
1,372
1,108
Incomplete secondary education

Total
Summary of average monthly salary before taxes in 2008, 2009 and 2010 is as follows:
SANITAS
SANITAS Group
2008
2009
2010
2008
2009
2010
22,533
22,347
22,112
24,992
23,198
19,113
Specialists
3,890
3,813
3,522
4,940
4,805
4,565
Workers
2,478
2,043
1,996
2,654
2,587
2,467
Top managers
24.3. Environment
Environmental issues were considered in all areas of the activity of SANITAS Group and the Company during the
reporting period: in the processes of medicines production, packaging, quality control, technical service and general
activity processes. Water and energy were economised, atmosphere and soil were preserved from the possible pollution.
21 tons of pollution got into environment from SANITAS stationary and mobile sources of pollution in 2010 (19.5 tons in
3
3
2009 and 22.17 tons in 2008). SANITAS stokehold burnt 318,883 nm of natural gas in 2010 (345,478 nm in 2009 and
3
3
193,927 nm in 2008). 229.5 m of mixture of thin propane-butane gases were used during the technological process in
2010 (632 l during 2009 and 1,501 l during 2008). SANITAS used 32 cars (29 cars in 2009 and 30 cars in 2008), 1
mobile loader and 1 lawn mover. The biggest part of the cars used diesel.
3
More efforts were made to lessen the amount of used water during the reporting year. 15,000 m of water were used
3
3
after choosing the most optimal solution: 2,000 m for daily use and 13,000 m for manufacturing needs. The use of
3
3
3
underwater (15,000 m ) in 2010 decreased significantly in comparison to 2009 (17,000 m ) and 2008 (50,000 m ).
In 2010 SANITAS accumulated about 150 tons of waste (147 tons in 2009 and 700 tons in 2008), 1.65 tons of them were
hazardous (0.5 tons in 2009 and 5 tons in 2008). More attention was paid for assortment of waste 18 tons of waste
were assorted and given for secondary use during the reporting year. Hazardous waste were given to managers of
hazardous waste, daily waste were kept in dump.
Jelfa reduced the amount of produced waste the waste amounted to 209.51 tons in 2010, while in 2009 it amounted to
226.2 tons and in 2008 1,748 tons. Jelfa used 163 cars, 1 tractor and 1 forklift in 2010. By changing barriers in sewage
treatment Jelfa improved efficiency of sewage treatment during the first half of 2010. On the packages of products
launched into foreign markets Jelfa puts eco labels in order to identify packaging material and to inform how to deal
with packaging waste.
Homeofarm is continuously controlling its impact on environment. It has an obligation to register amounts of manufacture
waste and to report them to a specialist companies responsible for recycling according to the applicable law. Homeofarm
produced 15.38 tons of waste during 2010 (58.04 tons in 2009, 63.91 tons in 2008), 10.55 tons of them were hazardous
(12.31 tons in 2009, 13.21 tons in 2008).
24.4. Research and development activity
SANITAS Groups research and development laboratory is located in Jelenia Gora. With a staff of over 25 people and
state of the art equipment, the laboratory contributes to SANITAS Group pipeline yielding 4 5 new dossiers per year. In
its in-house development efforts, SANITAS Group focuses on 3 therapeutic segments dermatology, ophthalmology and
hospital injectable preparations. Over the past 2 years the laboratory developed 8 new dossiers for dermatological
products. A number of projects are ongoing which will be completed during 2011.

82
The concentration on the therapeutic areas of dermatology, ophthalmology, diabetology, urology and hospital injectables
in 2010 continued. 4 dossiers were acquired and in house development of 4 other dossiers was finished in order to
strengthen the product portfolio in these therapeutic areas. SANITAS Group received 160 marketing authorizations in
2010 (108 in 2009 and 28 in 2008).
Licensing out activities were continued for products coming out of own developments in previous years, it is planned to
continue this business activity in future.
24.5. Purchases
Suppliers of SANITAS Group are divided into 2 groups, different purchasing strategies are applied to each of the group.
The first group consists of API, excipients and bulk suppliers. The most common features of this group large quantity of
suppliers and not big amount of items purchased from each of the supplier. By the end of 2010 SANITAS Group
purchased API, excipients and bulk from 157 suppliers (193 suppliers in 2009, 140 suppliers in 2008), the total amount of
purchased items is almost 400 (450 items in 2009 and above 600 in 2008). Possibility to decrease number of suppliers is
limited, as each production site produces different products, due to this reason different API and excipients are used in
production. The small amount of items purchased from each supplier does not give a lot of possibilities to use SANITAS
Group purchasing power and to agree on better purchasing and payment terms.
The second group includes packaging suppliers. For this group twice smaller amount of suppliers (82 by the end of 2010,
about 80 in 2009 and about 70 in 2008) and big amount of items purchased from each of the supplier are typical.
Especially big amount of items is purchased from printing houses, as for each finished product different boxes and
leaflets are used. It was purchased about 1,500 of different packaging items in 2010 (3,000 in 2009 and 6,000 in 2008).
As printed packaging materials are unique in each production site, the total number of packaging items used in SANITAS
Group sharply decreased in 2010 due to the sale of Slovakian production site. Several packaging suppliers are common
for all SANITAS Group it brings possibility to negotiate on better purchasing prices on Group level. Boxes, leaflets and
labels are purchased from local printing houses in Lithuania and Poland. As competition level in printing industry is very
high it allows getting good purchasing conditions and flexible delivery terms.
SANITAS Groups purchases of raw and packaging materials during 2008, 2009 and 2010:
2008
2009
2010
2,545
2,443
3,337
HBM
13,990
12,996
12,793*
Jelfa
54,371
43,352
52,804
Total
70,906
58,791
68,934
SANITAS
* Purchases until divestment of HBM on 8 July 2010.

24.6. Competitors
The main competitors of SANITAS Group are other pharmaceutical manufacturers supplying generic medicine to Central
and Western European markets. Raising import from other EU countries increases competition for food supplements
produced by SANITAS.
The main SANITAS competitors on Lithuanian market producing solid forms of medicinal products are Liuks, UAB,
Sopharma, Grindex, Actavis, Zentiva, KRKA, Lannacher, the main competitors producing injective preparations
Sandoz, KRKA, Ranbaxy. In the market of food supplements SANITAS competes with many food supplements
producers. As the main competitors having products with the similar composition or indication in this segment could be
mentioned Valentis, UAB, Aconitum, UAB, Vitabiotics, Vitabalans. The main SANITAS competitors in ointments market
are Grindex, Actavis, Spirig, GlaxoSmithKline, Shering.
24.7. Sales and products distribution
The Group launched 45 new products during 2010 (42 in 2009), which contributed to the Group sales LTL 1,755
thousand. Products, launched during 2008 2009 contributed LTL 37,853 thousand to the total 2010 sales of the Group
(LTL 23,982 thousand to Group 2009 sales).

83
Own products sales during 2008 2010 in the key Group markets are presented below:
2008
2009
2010
Poland
212,361
150,439
173,200
Russia
44,082
47,162
54,061
Lithuania
17,186
13,054
14,612
Ukraine
6,184
7,997
9,973
Czech Republic
4,232
6,588
7,532
Slovakia
2,661
5,373
6,125
Hungary
4,528
3,513
3,157
Other
18,992
17,565
19,658
Total
310,226
251,691
288,318
Own products sales in Poland market

Sales in the last quarter of 2010 in Poland remained at similar level to third quarter (LTL 43,092 thousand), while the
whole year sales amounted to LTL 173,200 thousand and exceeded the last year sales by LTL 22,761 thousand. Sales
increase was influenced by both better stock structure which ensured timely products supply to the market, and new
products sales. Sales increased in all categories, but most distinguished were CNS, dermatology and ophthalmology
medicines sales increases (by LTL 5,032 thousand, LTL 4,903 thousand and LTL 3,666 thousand respectively). Sales
fluctuation between the quarters decreased also due to lower inventories level in distribution channel and thus better
inventories turnover.
Own products sales in Russia market
The Group managed to equalize sales to Russia between the quarters in 2010. The fourth quarter sales reached LTL
14,021 thousand, and full year sales amounted to LTL 54,061 thousand, exceeding the previous year's sales by LTL
6,899 thousand. The fourth quarter sales were slightly lower than the corresponding 2009 quarter due to legislation
changes in Russia, as in August 2010 the Group has sold the products which import was not possible after September 1,
2010. Dermatological medicines for hospitals products sales contributed to the 2010 sales growth the most, as their
sales increased by LTL 1,899 thousand and LTL 2,886 thousand, respectively.
Own products sales in Lithuania market
The fourth quarter sales in the Lithuanian market increased by 12% compared to the previous quarter, while full year
sales amounted to LTL14,612 thousand, exceeding the previous year's sales by LTL 1,558 thousand. The new products,
which were launched in the last 3 years contributed most to the sales growth. Ophthalmology and OTC products sales
were increasing the most.
Own products sales in other markets
Sales in the other markets in 2010 amounted to LTL 46,445 thousand and exceeded the previous year's sales by 13%,
or LTL 5,409 thousand. The most significant sales growth was in Ukraine (LTL1,976 thousand) Czech Republic (LTL 944
thousand) and Slovakia (LTL 752 thousand). Dermatological and ophthalmological drug sales showed the fastest growth.
The graph below summarises the Group own products sales by main therapeutical lines in 2008 2010:
2010
2009
2008
0
40,000
Dermatology
80,000
OTC
CNS
120,000
160,000
Hospital
200,000
Metabolism
240,000
Ophthalmology
280,000
Urology
320,000
Other
Dermatology, OTC and CNS medicines are the biggest therapeutical lines in the Group sales in 2008 2010.
Ophthalmology, metabolism and CNS medicines sales were the fastest growing lines during 2010.

84
25. Financial activity review

The Group met 2010 plans and forecasts, which were set for this period in the last year. As planned, almost 50 new
products were launched. The Group did not expand to the new markets, but continued developing sales in existing
markets, which resulted in 15% sales increase in the key Group markets during 2010. The increased manufacturing
capacities (see Note 24.1) helped to use the resources more cost-effectively and contributed to the higher gross margin.
More over the reduction of back office spending and headcount reduction in 2009 gave positive effect to the current year
results.
In conclusion, the increase in sales and utilisation capacities and decrease in operating expenses resulted in higher
operative profit in 2010, in comparison to 2009, by LTL 25, 681 thousand. Moreover, the sale of the subsidiary HBM
Pharma s.r.o. contributed to the Group result by LTL 14,487 thousand. The mentioned facts influenced the significant
Group net result increase in comparison to prior year.
SANITAS Groups key financial ratios as well as their dynamics in 2007 2010:
2007
2008
2009
2010
Revenues
335,404
382,512
322,749
339,372
% Growth
107.4%
14.0%
-15.6%
5.2%
Cost of sales
(163,724)
(171,404)
(153,962)
(149,425)
Gross profit
171,680
211,108
168,787
189,947
% Growth
125.7%
23.0%
-20.0%
12.5%
% Margin
51.2%
55.2%
52.3%
56.0%
Selling and distribution expenses
(74,449)
(96,619)
(80,455)
(82,310)
% of Revenues
22.2%
25.3%
24.9%
24.3%
Regulatory affairs expenses
(8,457)
(14,607)
(11,106)
(11,227)
% of Revenues
Research and development expenses
% of Revenues
Administrative expenses
2.5%
3.8%
3.4%
3.3%
(2,301)
(2,726)
(1,901)
(1,958)
0.7%
0.7%
0.6%
0.6%
(49,703)
(35,954)
% of Revenues
7.5%
13.0%
11.1%
8.6%
Result of other operating activity
2,639
2,521
1,252
1,144
EBIT
(25,095)
(29,292)
64,017
49,974
40,623
66,304
% Growth
608.4%
-21.9%
-18.7%
63.2%
% Margin
19.1%
13.1%
12.6%
19.5%
(25,281)
(60,037)
(22,870)
(3,305)
38,742
(10,063)
17,753
62,999
Finance activity, net

EBT
% Growth
608.4%
-126.0%
276.4%
254.9%
% Margin
11.6%
-2.6%
5.5%
18.6%
Income tax
(1,446)
8,179
Net profit (loss)
37,296
(1,884)
91
(9,685)
17,844
53,314
% Growth
608.4%
-105.1%
1,047.1%
198.8%
% Margin
11.1%
-0.5%
5.5%
15.7%

85
Increase in Group operations resulted in higher profitability and liquidity ratios in 2010.
2007
2008
2009
2010
Return on Equity
10.2%
-0.6%
5.6%
14.1%
Return on Assets
4.8%
-0.3%
2.6%
8.3%
116.2%
38.8%
74.1%
81.4%
76.3%
26.9%
47.5%
51.9%
1.2
(0.06)
0.57
1.71
Liquidity ratio
Quick ratio
Basic and diluted earnings (loss) per
share (in LTL)
Price to earnings, LTL
16.58
14.65
8.50
The Group invested LTL 15,530 thousand to the new assets acquisition in 2010 (LTL 8,792 thousand in 2009). Additions
by type of the assets are disclosed in the Consolidated and the separate financial statements Notes 16 Property, plant
and equipment and 17 Intangible assets. Note 5 Segment information of these financial statements shows additions by
Group segments.
26. Plans and forecasts

The Group introduced 45 new products in 2010 and plans to launch over 100 new products in 2011. Number of the
dermatology products launched in 2010 and some of those to be launched in 2011 forms a full product line for complete
treatment of specific diseases. The Group continues to develop product pipeline putting special attention to
ophthalmology and dermatology lines. Further growth of the Group is planned via sales development in existing markets
and new products introduction.
The Group plans to launch new products in Russia since 2011. Previously it was not the case, as the Group was
optimising its sales force in Russian market and preparing products for the launch. The management expects that sales
to Russian market will keep 20% share of total own product sales in 2011.
Sales in other markets (such as Lithuania, Czech, Slovakia) should grow faster than in Poland thus slightly increasing
contribution its share in total sales. Nevertheless Poland is expected to remain strongest country in terms of sales with
nearly 60% contribution to total Group own sales.
The Group launched number of ophthalmology products in 2010 and plans to continue launches in 2011. Most of
ophthalmology products will be produced in SANITAS, Lithuania thus improving capacity utilisation.
The Group will keep the support functions as they are now and will look for further improvement possibilities thus
improving efficiency and lowering cost whenever possible.
27. Main risks and risk management

Main operational risks of the Group includes the changes in the legal regulations and regulatory procedures, competition
with other pharmaceutical companies in the markets of operations, development of new products, reliability of raw
material suppliers and other contractual partners, production capacity management and experienced and skilled
employees attraction and retentions. Top management of the Group monitors the implementation of the processes and
the procedures, which mitigates these risks.
Main financial risks, to which SANITAS Group is exposed are interest rate, liquidity, foreign exchange and credit risks.
The detail information about these risk management is presented in the Consolidated and the separate financial
statements Note 34 Financial risk management objectives and policies.
28. Main features of internal controls and risk management system for
consolidated financial reports preparation
SANITAS Group management assures that Group accounting and finance departments employees have relevant
competence, experience and up-to-date knowledge needed for consolidated financial reports preparation. The control of
prepared reports quality is performed by segregation of duties. All consolidated financial reports are prepared by
SANITAS accounting or finance departments employees and are reviewed in a detail way and approved by Head of
Group Accounting and Chief Financial Officer. SANITAS has the Audit Committee, which supervises the reporting
process and prepares the reports to the General Shareholders Meeting twice a year.
86
29. Related party transactions

In 2010 SANITAS Group had related party transactions with its subsidiaries (Jelfa, HBM, Homeofarm and Sanitas
Pharma), the shareholder of the Company Invalda, AB and its associates (Acena, AB, Baltic Amadeus Infrastrukturos
Paslaugos, UAB, Informatikos Pasaulis, UAB), the shareholders Amber Trust II, Citigroup Venture Capital International
Jersey Limited and other shareholders, who are natural persons. More details of these transactions are presented in the
Consolidated and the separate financial statements Note 35 Related party transactions.
Other information
30. Order of amendment of SANITAS Articles of Association
The Articles of Association of the Company may be amended on the basis of the decision adopted by the General
Shareholders Meeting with the 5/6 (five sixths) majority votes of the shareholders present in the General Shareholders
Meeting. After the General Shareholders Meeting has adopted the decision to change the Articles of Association, the
whole text of the changed Articles of Association is laid out with the signature of the person authorised by the General
Shareholders Meeting. Amended Articles of Association must be registered in the Register of Legal Entities according to
the terms specified in the law.
31. Significant agreements the party of which is SANITAS and which would
come into force, be amended or terminated in the case of change of
control of the Company
The Company is not a party of significant agreements that would come into force, be amended or terminated in case of
change of control of the Company.
32. Agreements with Companys employees and members of managing

bodies providing compensation in the case of their resignation or
dismissal without serious reason or if their employment ends because
of the change of the control of SANITAS
The Company has not signed agreements with its employees or members of managing bodies regarding payment of the
compensations in the case of their resignation or dismissal without serious reason or if their employment ends because
of the change of the control of the Company.
33. Data about the Companys publicly disclosed information

SANITAS publicly announced all information as it is required by law for listed companies (annual, interim information,
transaction (-s) in issuers securities concluded by the manager of the issuer, material events and etc.). It is possible to
become familiar with the publicly disclosed information on NASDAQ and Companys webpages.
34. Main events of 2010
On 10 February 2010 Letter of intent on sale of 100% of the shareholding of SANITAS in HBM was signed between
the Company and Latvian company SIA Liplats 2000.
On 27 April 2010 agreement on sale of HBM was signed between SANITAS and SIA Liplats 2000.
On 28 April 2010 Companys Ordinary General Shareholders Meeting was held, it resolved questions assigned to
the competence of the General Shareholders Meeting, approved SANITAS Consolidated and Separate Companys
financial statements and annual report for 2009. Members of SANITAS Management Board and Audit Committee
for the term of office of 2010-2014 were elected.
On 15 May 2010 HBM established subsidiary Sanitas Pharma.

87
On 16 June 2010 share purchase agreement on sale of 100% of shares of Sanitas Pharma was signed between
two SANITAS subsidiaries Jelfa and HBM. Thus separation of HBM marketing, sales and regulatory organization
located in Bratislava and Prague and its transfer to SANITAS Group related to the sale of HBM was completed.
On 8 July 2010 transaction on sale of SANITAS subsidiary HBM was closed.
On 12 October 2010 SANITAS General Shareholders Meeting was held. It decided to elect Deloitte Lietuva, UAB
as an audit company for the audit of financial statements of the Company and its subsidiaries and consolidated
financial statements for the year 2010 as well as for assessment of consolidated annual report of the Company for
the year 2010.
35. Authorities of SANITAS managing bodies to issue or acquire shares

According to the Articles of Association of the Company, SANITAS General Shareholders Meeting has an exclusive right
to adopt resolutions regarding:
1. Issuance of new equity or capital, including shares, rights, options, warrants to purchase shares (or other
convertible or quasi-equity securities), provided each shareholder has a pre-emptive right to subscribe for the newly
issued shares or rights;
2. Any reduction, repayment or buyback of the shares of the Company or any shares of its subsidiaries;
3. Issuance of shares or other securities under the employee stock option plan and its rules and regulations, and any
other future stock option or incentive plans as approved by the Management Board;
4. Decision to revoke for all the shareholders the pre-emptive right in acquiring the shares or convertible debentures of
the Company of a specific issue.
SANITAS shareholders have the following rights:
1. To receive shares without payment if the authorized capital is increased out of the Company funds except in cases
provided in the Law on companies of the Republic of Lithuania;
2. To have pre-emption right in acquiring shares or convertible debentures issued by the Company, except in cases
when the General Shareholders Meeting decides to withdraw the pre-emption right for all the shareholders,
according to the Law on companies of the Republic of Lithuania;
3. To sell or otherwise transfer the shares to the proprietorship of other persons.

88
SANITAS disclosure form regarding The Compliance with The Governance

Code for The Companies Listed on The Nasdaq Regulated Market
Principles / Recommendations
Yes / No /
Not
Applicable
Commentary
Principle I: Basic Provisions

The overriding objective of a company should be to operate in common interests of all the shareholders by optimizing
over time shareholder value.
1.1. A company should adopt and make public
the companys development strategy and
objectives by clearly declaring how the company
intends to meet the interests of its shareholders
and optimize shareholder value.
Yes
The development strategy and objectives of the

Companys activity are disclosed to its
shareholders in Consolidated and Separate
financial statements, consolidated six months
and annual reports, communications to media.
Financial statements and reports, in Lithuanian
and English, are placed at Companys webpage
and for this reason are easily available to the
shareholders.
1.2. All management bodies of a company

should act in furtherance of the declared
strategic objectives in view of the need to
optimize shareholder value.
Yes
Companys Management Board, top

management make every effort to achieve
implementation of strategic objectives new
departments belonging to SANITAS Group are
being established, the team of qualified
specialists is being expanded.
1.3. A companys supervisory and management

bodies should act in close co-operation in order
to attain maximum benefit for the company and
its shareholders.
No
Supervisory body the Supervisory Board is not

formed in the Company. This recommendation is
carried out by the Head of the Company and the
Management Board. The Management Board
approves strategy of Companys activity, annual
budget and any material deviations therefrom,
controls conclusion of contracts and
implementation of budget, analyses
Consolidated and Separate financial statements
and renders them to shareholders approval.
Implementation of decisions of the Management
Board is assigned to the Head of the Company
and through the latter to the functional
managers.
1.4. A companys supervisory and management

bodies should ensure that the rights and
interests of persons other than the companys
shareholders (e.g. employees, creditors,
suppliers, clients, local community), participating
in or connected with the companys operation,
are duly respected.
Yes
Companys management bodies pursue

ensuring interests of all persons related with the
Companys activity. Transparent activity,
periodical information about activity results and
arising problems, communication with media on
the part of the management permits interested
parties creditors, clients, suppliers, local
community - to receive necessary information on
the Company and so makes the possibility to
ensure their rights and interests. Company aims
at retaining long-lasting relations with its
business partners holding that proper and timely
fulfilment of contractual obligations and quality
assurance of products are the priority.
Employees are informed about the on-going or
future changes, meetings of the management of
the Company and its employees are organized.
Company has periodical newsletter InSanitas
available to all employees of SANITAS Group.

89
Yes / No /
Not
Applicable
Commentary
Principle II: The corporate governance framework

The corporate governance framework should ensure the strategic guidance of the company, the effective oversight of
the companys management bodies, an appropriate balance and distribution of functions between the companys
bodies, protection of the shareholders interests.
2.1. Besides obligatory bodies provided for in
the Law on Companies of the Republic of
Lithuania a general shareholders meeting and
the chief executive officer, it is recommended
that a company should set up both a collegial
supervisory body and a collegial management
body. The setting up of collegial bodies for
supervision and management facilitates clear
separation of management and supervisory
functions in the company, accountability and
control on the part of the chief executive officer,
which, in its turn, facilitate a more efficient and
transparent management process.
No
Collegial supervisory management body is not

formed in the Company. Companys collegial
management body is the Management Board.
The Management Board is able to supervise
implementation of strategic objectives of the
Company and control Companys management
properly. The Management Board elects Head of
the Company the General Manager who
periodically reports to the Management Board on
the Companys activity and implementation of
the objectives set for him. The Management
Board approves results of the previous reporting
periods and sets the objectives for the coming
reporting periods.
2.2. A collegial management body is responsible

for the strategic management of the company
and performs other key functions of corporate
governance. A collegial supervisory body is
responsible for the effective supervision of the
companys management bodies.
Yes
Collegial management body the Management

Board is responsible for the strategic
management of the Company. The Management
Board analyses and confirms activity strategy
presented by the Head of the Company,
analyses and assesses financial state of the
Company.
2.3. Where a company chooses to form only one

collegial body, it is recommended that it should
be a supervisory body, i.e. the supervisory
board. In such a case, the supervisory board is
responsible for the effective monitoring of the
functions performed by the companys chief
executive officer.
No
Collegial supervisory body is not formed in the

Company. The Management Board elects Head
of the Company who periodically reports to the
Management Board on the Companys activity
and implementation of the objectives set for him.
The Management Board approves results of the
previous reporting periods and sets the
objectives for the coming reporting periods.
2.4. The collegial supervisory body to be elected

by the general shareholders meeting should be
set up and should act in the manner defined in
Principles III and IV. Where a company should
decide not to set up a collegial supervisory body
but rather a collegial management body, i.e. the
board, Principles III and IV should apply to the
board as long as that does not contradict the
1
essence and purpose of this body.
Yes
Company does not have collegial supervisory

body, but it does have collegial management
body the Management Board (5 members)
elected by the General Shareholders Meeting.
Principles III and IV are applied to the
Management Board in so far as they do not
contradict the essence and purpose of this body.
Provisions of Principles III and IV are more applicable to those instances when the general shareholders meeting elects the supervisory board, i.e. a body
that is essentially formed to ensure oversight of the companys board and the chief executive officer and to represent the companys shareholders.
However, in case the company does not form the supervisory board but rather the board, most of the recommendations set out in Principles III and IV
become important and applicable to the board as well. Furthermore, it should be noted that certain recommendations, which are in their essence and
nature applicable exclusively to the supervisory board (e.g. formation of the committees), should not be applied to the board, as the competence and
functions of these bodies according to the Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123-5574) are different. For instance,
item 3.1 of the Code concerning oversight of the management bodies applies to the extent it concerns the oversight of the chief executive officer of the
company, but not of the board itself; item 4.1 of the Code concerning recommendations to the management bodies applies to the extent it relates to the
provision of recommendations to the companys chief executive officer; item 4.4 of the Code concerning independence of the collegial body elected by the
general meeting from the companys management bodies is applied to the extent it concerns independence from the chief executive officer.

90
2.5. Companys management and supervisory
bodies should comprise such number of board
(executive directors) and supervisory (nonexecutive directors) board members that no
individual or small group of individuals can
dominate decision-making on the part of these
2
bodies.
Yes / No /
Not
Applicable
Commentary
Yes
The Management Board is comprised of 5 (five)

members. Number of members was set and
members were elected by the General
Shareholders Meeting. In Companys view, there
is no situation when small group of individuals
can dominate decision-making in the
Management Board.
2.6. Non-executive directors or members of the

supervisory board should be appointed for
specified terms subject to individual re-election,
at maximum intervals provided for in the
Lithuanian legislation with a view to ensuring
necessary development of professional
experience and sufficiently frequent
reconfirmation of their status. A possibility to
remove them should also be stipulated however
this procedure should not be easier than the
removal procedure for an executive director or a
member of the management board.
Not applicable
The provision is not applicable whereas the

Company has only collegial management body
the Management Board.
2.7. Chairman of the collegial body elected by

the general shareholders meeting may be a
person whose current or past office constitutes
no obstacle to conduct independent and
impartial supervision. Where a company should
decide not to set up a supervisory board but
rather the board, it is recommended that the
chairman of the board and chief executive officer
of the company should be a different person.
Former companys chief executive officer should
not be immediately nominated as the chairman
of the collegial body elected by the general
shareholders meeting. When a company
chooses to departure from these
recommendations, it should furnish information
on the measures it has taken to ensure
impartiality of the supervision.
Yes
The Chairman of the Management Board and

Head of the Company is not the same person,
the Chairman of the Management Board was not
the Head of the Company before.
Principle III: The order of the formation of a collegial body to be elected by a general shareholders meeting
The order of the formation a collegial body to be elected by a general shareholders meeting should ensure
representation of minority shareholders, accountability of this body to the shareholders and objective monitoring of the
3
companys operation and its management bodies.
3.1. The mechanism of the formation of a
collegial body to be elected by a general
shareholders meeting (hereinafter in this
Principle referred to as the collegial body)
should ensure objective and fair monitoring of
the companys management bodies as well as
representation of minority shareholders.
Yes
The mechanism of the formation of the

Management Board ensures objective and fair
monitoring of Companys management bodies.
Information on candidates to the Management
Board, their activities, qualification and
education are disclosed to the shareholders prior
to election in the General Shareholders Meeting
and in consolidated six months and annual
reports of the Company. Minority shareholders
rights and ability to have their own
representative in the collegial management body
is not restricted.
Definitions executive director and non-executive director are used in cases when a company has only one collegial body.
Attention should be drawn to the fact that in the situation where the collegial body elected by the general shareholders meeting is the board, it is natural
that being a management body it should ensure oversight not of all management bodies of the company, but only of the single-person body of
management, i.e. the companys chief executive officer. This note shall apply in respect of item 3.1 as well.
3

91
Yes / No /
Not
Applicable
Commentary
3.2. Names and surnames of the candidates to

become members of a collegial body,
information about their education, qualification,
professional background, positions taken and
potential conflicts of interest should be disclosed
early enough before the general shareholders
meeting so that the shareholders would have
sufficient time to make an informed voting
decision. All factors affecting the candidates
independence, the sample list of which is set out
in Recommendation 3.7, should be also
disclosed. The collegial body should also be
informed on any subsequent changes in the
provided information. The collegial body should,
on yearly basis, collect data provided in this item
on its members and disclose this in the
companys annual report.
Yes
Names and surnames of candidates offered to

the members of the Management Board are
announced through NASDAQ system in
advance, no less than 21 (twenty one) days
before the General Shareholders Meeting
together with draft resolutions. It is possible to
become familiar with information on candidates
education, qualification, professional experience
and positions taken at the Companys seat no
less than 21 (twenty one) days before the
General Shareholders Meeting. Candidates are
likewise introduced during the General
Shareholders Meeting. Company collects
information on its Management Board members
education, other positions taken and
participation in the activity of other companies
periodically. Information on the members of the
Management Board may be found in
consolidated six months and annual reports of
the Company.
3.3. Should a person be nominated for members

of a collegial body, such nomination should be
followed by the disclosure of information on
candidates particular competences relevant to
his/her service on the collegial body. In order
shareholders and investors are able to ascertain
whether members competence is further
relevant, the collegial body should, in its annual
report, disclose the information on its
composition and particular competences of
individual members which are relevant to their
service on the collegial body.
Yes
Companys consolidated annual and six months

reports include information on the composition of
the collegial body the Management Board. The
reports shortly introduce education and positions
taken in other companies by all member of the
Management Board giving the possibility to
shareholders and investors to ascertain whether
competences of individual members are relevant
to their services.
3.4 In order to maintain a proper balance in

terms of the current qualifications possessed by
its members, the desired composition of the
collegial body shall be determined with regard to
the companys structure and activities, and have
this periodically evaluated. The collegial body
should ensure that it is composed of members
who, as a whole, have the required diversity of
knowledge, judgment and experience to
complete their tasks properly. The members of
the audit committee, collectively, should have a
recent knowledge and relevant experience in the
fields of finance, accounting and/or audit for the
stock exchange listed companies. At least one of
the members of the remuneration committee
should have knowledge of and experience in the
field of remuneration policy.
No
Company only partially complies with this

recommendation. There is no practice of
evaluation of qualification of the Management
Board members. The qualification of the Audit
Committee members is evaluated twice a year. It
is considered that the Management Board and
the Audit Committee members have a wideranging recent knowledge in the fields of
finance, economics, law as well as sufficient
experience in order to have their tasks
performed properly.
3.5. All new members of the collegial body

should be offered a tailored program focused on
introducing a member with his/her duties,
corporate organization and activities. The
collegial body should conduct an annual review
to identify fields where its members need to
update their skills and knowledge.
No
Company only partially complies with this

provision: new members of the Management
Board are familiarized with the Companys
internal documentation, business processes,
factors having impact on activity results. An
annual review of the Management Board
members skills and knowledge is not performed
in the Company.

92
Yes / No /
Not
Applicable
Commentary
3.6. In order to ensure that all material conflicts

of interest related with a member of the collegial
body are resolved properly, the collegial body
4
should comprise a sufficient number of
5
independent members.
No
The matter of independent members in the

collegial management body and a sufficient
number thereof was not yet considered in the
Company. As this question will be considered
rational decision is aimed in order to ensure the
compliance with the recommendations of this
Code and interests of the shareholders. Specific
criteria for the evaluation of independence are
also going to be set.
3.7. A member of the collegial body should be

considered to be independent only if he is free of
any business, family or other relationship with
the company, its controlling shareholder or the
management of either, that creates a conflict of
interest such as to impair his judgment. Since all
cases when member of the collegial body is
likely to become dependent are impossible to
list, moreover, relationships and circumstances
associated with the determination of
independence may vary amongst companies
and the best practices of solving this problem
are yet to evolve in the course of time,
assessment of independence of a member of
the collegial body should be based on the
contents of the relationship and circumstances
rather than their form. The key criteria for
identifying whether a member of the collegial
body can be considered to be independent are
the following:
No
See comment to the clause 3.6.
1) He/she is not an executive director or

member of the board (if a collegial body
elected by the general shareholders
meeting is the supervisory board) of the
company or any associated company and
has not been such during the last five
years;
2) He/she is not an employee of the company
or some any company and has not been
such during the last three years, except for
cases when a member of the collegial body
does not belong to the senior management
and was elected to the collegial body as a
representative of the employees;
The Code does not provide for a concrete number of independent members to comprise a collegial body. Many codes in foreign countries fix a concrete
number of independent members (e.g. at least 1/3 or 1/2 of the members of the collegial body) to comprise the collegial body. However, having regard to
the novelty of the institution of independent members in Lithuania and potential problems in finding and electing a concrete number of independent
members, the Code provides for a more flexible wording and allows the companies themselves to decide what number of independent members is
sufficient. Of course, a larger number of independent members in a collegial body is encouraged and will constitute an example of more suitable corporate
governance.
5
It is notable that in some companies all members of the collegial body may, due to a very small number of minority shareholders, be elected by the votes
of the majority shareholder or a few major shareholders. But even a member of the collegial body elected by the majority shareholders may be considered
independent if he/she meets the independence criteria set out in the Code.

93
Yes / No /
Not
Applicable
Commentary
3) He/she is not receiving or has been not

receiving significant additional
remuneration from the company or
associated company other than
remuneration for the office in the collegial
body. Such additional remuneration
includes participation in share options or
some other performance based pay
systems; it does not include compensation
payments for the previous office in the
company (provided that such payment is
no way related with later position) as per
pension plans (inclusive of deferred
compensations);
4) He/she is not a controlling shareholder or
representative of such shareholder (control
as defined in the Council Directive
83/349/EEC Article 1 Part 1);
5) He/she does not have and did not have
any material business relations with the
company or associated company within the
past year directly or as a partner,
shareholder, director or superior employee
of the subject having such relationship. A
subject is considered to have business
relations when it is a major supplier or
service provider (inclusive of financial,
legal, counselling and consulting services),
major client or organization receiving
significant payments from the company or
its group;
6) He/she is not and has not been, during the
last three years, partner or employee of the
current or former external audit company of
the company or associated company;
7) He/she is not an executive director or
member of the board in some other
company where executive director of the
company or member of the board (if a
collegial body elected by the general
shareholders meeting is the supervisory
board) is non-executive director or member
of the supervisory board, he/she may not
also have any other material relationships
with executive directors of the company
that arise from their participation in
activities of other companies or bodies;
8) He/she has not been in the position of a
member of the collegial body for over than
12 years;
9) He/she is not a close relative to an
executive director or member of the board
(if a collegial body elected by the general
shareholders meeting is the supervisory
board) or to any person listed in above
items 1 to 8. Close relative is considered to
be a spouse (common-law spouse),
children and parents.

94
Yes / No /
Not
Applicable
Commentary
3.8. The determination of what constitutes

independence is fundamentally an issue for the
collegial body itself to determine. The collegial
body may decide that, despite a particular
member meets all the criteria of independence
laid down in this Code, he cannot be considered
independent due to special personal or
company-related circumstances.
Not applicable
The Management Board did not determine key

criteria for identifying whether a member of the
collegial body can be considered as independent
yet. As it starts doing that, the Management
Board is not going to be limited of its right to
principally determine what constitutes
independence. The Management Board shall be
entitled to decide that despite a particular
member meets all the criteria of independence
laid down in this Code, he/she may not be held
independent due to special personal or the
Company related circumstances.
3.9. Necessary information on conclusions the

collegial body has come to in its determination of
whether a particular member of the body should
be considered to be independent should be
disclosed. When a person is nominated to
become a member of the collegial body, the
company should disclose whether it considers
the person to be independent. When a particular
member of the collegial body does not meet one
or more criteria of independence set out in this
Code, the company should disclose its reasons
for nevertheless considering the member to be
independent. In addition, the company should
annually disclose which members of the collegial
body it considers to be independent.
No
The Company does not comply with this

recommendation, whereas up till now
determination of independence of members of
the Management Board and announcement
thereof has not been applied in practice.
3.10. When one or more criteria of

independence set out in this Code has not been
met throughout the year, the company should
disclose its reasons for considering a particular
member of the collegial body to be independent.
To ensure accuracy of the information disclosed
in relation with the independence of the
members of the collegial body, the company
should require independent members to have
their independence periodically re-confirmed.
No
The Company does not comply with this

recommendation whereas up till now
determination of independence of members of
the Management Board and announcement
thereof has not been applied in practice. As key
criterions for identifying whether a member of
the collegial body can be considered as
independent will be identified, the Company is
going to announce reasons for holding one or
another member independent, cases when
members of the bodies do not meet the criteria
of independence throughout the year and are
still considered as independent, independent
members of the Management Board shall be
asked to confirm their independence.
3.11. In order to remunerate members of a

collegial body for their work and participation in
the meetings of the collegial body, they may be
6
remunerated from the companys funds. . The
general shareholders meeting should approve
the amount of such remuneration.
No
Members of the Management Board are not

remunerated from the Companys funds.
It is notable that currently it is not yet completely clear, in what form members of the supervisory board or the board may be remunerated for their work in
these bodies. The Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123-5574) provides that members of the supervisory board or
the board may be remunerated for their work in the supervisory board or the board by payment of annual bonuses (tantiems) in the manner prescribed by
Article 59 of this Law, i.e. from the companys profit. The current wording, contrary to the wording effective before 1 January 2004, eliminates the exclusive
requirement that annual bonuses (tantiems) should be the only form of the companys compensation to members of the supervisory board or the board. So
it seems that the Law contains no prohibition to remunerate members of the supervisory board or the board for their work in other forms, besides bonuses,
although this possibility is not expressly stated either.

95
Yes / No /
Not
Applicable
Commentary
Principle IV: The duties and liabilities of a collegial body elected by the general shareholders meeting
The corporate governance framework should ensure proper and effective functioning of the collegial body elected by
7
the general shareholders meeting, and the powers granted to the collegial body should ensure effective monitoring of
the companys management bodies and protection of interests of all the companys shareholders.
4.1. The collegial body elected by the general
shareholders meeting (hereinafter in this
Principle referred to as the collegial body)
should ensure integrity and transparency of the
companys financial statements and the control
system. The collegial body should issue
recommendations to the companys
management bodies and monitor and control the
8
companys management performance.
Yes
The Management Board submits to the General

Shareholders Meeting reviews and proposals
regarding financial statements and annual
reports, distribution of the profit. Internal rules of
the Audit Committee confirmed by the General
Shareholders Meeting state that committee
provides the Management Board with
recommendations related to selection, repeated
appointment and cancellation of an external
audit company as well as terms and conditions
of agreement with the audit company, observes
the process of carrying out an external audit,
how the external auditor and audit company
follows the principles of independence and
objectivity, the process of preparation of financial
statements of the Company.
4.2. Members of the collegial body should act in

good faith, with care and responsibility for the
benefit and in the interests of the company and
its shareholders with due regard to the interests
of employees and public welfare. Independent
members of the collegial body should (a) under
all circumstances maintain independence of their
analysis, decision-making and actions (b) do not
seek and accept any unjustified privileges that
might compromise their independence, and (c)
clearly express their objections should a
member consider that decision of the collegial
body is against the interests of the company.
Should a collegial body have passed decisions
independent member has serious doubts about,
the member should make adequate conclusions.
Should an independent member resign from his
office, he should explain the reasons in a letter
addressed to the collegial body or audit
committee and, if necessary, respective
company-not-pertaining body (institution).
Yes
According to the Companys data all members of

the Management Board act in good faith, with
care and responsibility for the benefit of the
Company and shareholders, with regard to the
interests of employees and public welfare
striving to maintain their independence when
making their decisions.
See Footnote 3.
See Footnote 3. In the event the collegial body elected by the general shareholders meeting is the board, it should provide recommendations to the
companys single-person body of management, i.e. the companys chief executive officer.
8

96
Yes / No /
Not
Applicable
Commentary
4.3. Each member should devote sufficient time

and attention to perform his duties as a member
of the collegial body. Each member of the
collegial body should limit other professional
obligations of his (in particular any directorships
held in other companies) in such a manner they
do not interfere with proper performance of
duties of a member of the collegial body. In the
event a member of the collegial body should be
9
present in less than a half of the meetings of
the collegial body throughout the financial year
of the company, shareholders of the company
should be notified.
Yes
The members of the Management Board

perform their duties properly: they actively take
part in the meetings of the Management Board
and devote sufficient time for the performance of
their duties as members of collegial body.
4.4. Where decisions of a collegial body may

have a different effect on the companys
shareholders, the collegial body should treat all
shareholders impartially and fairly. It should
ensure that shareholders are properly informed
on the companys affairs, strategies, risk
management and resolution of conflicts of
interest. The company should have a clearly
established role of members of the collegial
body when communicating with and committing
to shareholders.
Yes
Collegial body of the Company acts fairly and

impartially with regard to all shareholders of the
Company. Management Board work regulations
specify that Management Board reports to the
General Shareholders Meeting no less than
once a year, or at the General Shareholders
Meeting request about Companys and
Management Boards activity while performing
functions assigned by laws, Articles of
Association and General Shareholders Meeting.
Consolidated six months and annual reports
inform shareholders about the Companys
affairs, strategies, risk management The
Management Board presents audited annual
report to the General Shareholders Meeting
which is included as separate question into
agenda of the meeting. The Management Board
separately presents annual financial statements
and project of profit distribution for the
confirmation of the General Shareholders
Meeting.
4.5. It is recommended that transactions (except

insignificant ones due to their low value or
concluded when carrying out routine operations
in the company under usual conditions),
concluded between the company and its
shareholders, members of the supervisory or
managing bodies or other natural or legal
persons that exert or may exert influence on the
companys management should be subject to
approval of the collegial body. The decision
concerning approval of such transactions should
be deemed adopted only provided the majority
of the independent members of the collegial
body voted for such a decision.
Yes
Management Board work regulations and

Articles of Association state that Management
Board discusses and approves contracts with
any member of the administration, employees of
the Company, members of the Management
Board, shareholders, other interested persons or
those closely related to the aforementioned.
Decision of the Management Board on contracts
with members of the administration, Companys
employees, members of the Management Board
or those closely related to the aforementioned
requires more than 3/5 (three fifths) majority
votes of the Management Board members
attending the Management Board meeting.
Decisions on contracts with shareholders or
those closely related to them 4/5 (four fifths)
majority votes of the Management Board
members attending the Management Board
meeting.
It is notable that companies can make this requirement more stringent and provide that shareholders should be informed about failure to participate at the
meetings of the collegial body if, for instance, a member of the collegial body participated at less than 2/3 or 3/4 of the meetings. Such measures, which
ensure active participation in the meetings of the collegial body, are encouraged and will constitute an example of more suitable corporate governance.

97
4.6. The collegial body should be independent in
passing decisions that are significant for the
companys operations and strategy. Taken
separately, the collegial body should be
independent of the companys management
10
bodies . Members of the collegial body should
act and pass decisions without an outside
influence from the persons who have elected it.
Companies should ensure that the collegial body
and its committees are provided with sufficient
administrative and financial resources to
discharge their duties, including the right to
obtain, in particular from employees of the
company, all the necessary information or to
seek independent legal, accounting or any other
advice on issues pertaining to the competence
of the collegial body and its committees. When
using the services of a consultant with a view to
obtaining information on market standards for
remuneration systems, the remuneration
committee should ensure that the consultant
concerned does not at the same time advice the
human resources department, executive
directors or collegial management organs of the
company concerned.
Yes / No /
Not
Applicable
Yes
Commentary
The Management Board is independent when
making decisions having impact on Companys
activity and strategy. Members of the
Management Board are properly provided with
all resources necessary for discharging their
duties, including the right to obtain independent
legal, accounting or other advice from the
external specialists. Companys employees
provide members of the Management Board with
necessary information in order to make them
able to properly discharge their duties and
decide on matters pertaining to their
competence.
10
In the event the collegial body elected by the general shareholders meeting is the board, the recommendation concerning its independence from the
companys management bodies applies to the extent it relates to the independence from the companys chief executive officer.

98
Yes / No /
Not
Applicable
Commentary
4.7. Activities of the collegial body should be

organized in a manner that independent
members of the collegial body could have major
influence in relevant areas where chances of
occurrence of conflicts of interest are very high.
Such areas to be considered as highly relevant
are issues of nomination of companys directors,
determination of directors remuneration and
control and assessment of companys audit.
Therefore when the mentioned issues are
attributable to the competence of the collegial
body, it is recommended that the collegial body
should establish nomination, remuneration, and
11
audit committees . Companies should ensure
that the functions attributable to the nomination,
remuneration, and audit committees are carried
out. However they may decide to merge these
functions and set up less than three committees.
In such case a company should explain in detail
reasons behind the selection of alternative
approach and how the selected approach
complies with the objectives set forth for the
three different committees. Should the collegial
body of the company comprise small number of
members, the functions assigned to the three
committees may be performed by the collegial
body itself, provided that it meets composition
requirements advocated for the committees and
that adequate information is provided in this
respect. In such case provisions of this Code
relating to the committees of the collegial body
(in particular with respect to their role, operation,
and transparency) should apply, where relevant,
to the collegial body as a whole.
No
Only the Audit Committee is formed in the

Company (4 (four) members, 1 (one) of them is
independent), remuneration and nomination
committees are not formed. Members of the
Audit Committee are elected by the General
Shareholders Meeting. The Audit Committee
provides the Management Board with
recommendations related to selection, repeated
appointment and cancellation of an external
audit company as well as terms and conditions
of agreement with the audit company, observes
the process of carrying out an external audit,
how the external auditor and audit company
follow the principles of independence and
objectivity, the process of preparation of financial
statements of the Company, observes the
efficiency of systems of internal control, risk
management and internal audit, reviews
efficiency of external audit process and
responsiveness of management of the Company
to recommendations and remarks made in the
external auditors management letter.
4.8. The key objective of the committees is to

increase efficiency of the activities of the
collegial body by ensuring that decisions are
based on due consideration, and to help
organize its work with a view to ensuring that the
decisions it takes are free of material conflicts of
interest. Committees should exercise
independent judgement and integrity when
exercising its functions as well as present the
collegial body with recommendations concerning
the decisions of the collegial body. Nevertheless
the final decision shall be adopted by the
collegial body. The recommendation on creation
of committees is not intended, in principle, to
constrict the competence of the collegial body or
to remove the matters considered from the
purview of the collegial body itself, which
remains fully responsible for the decisions taken
in its field of competence.
Yes
The Audit Committee exercises independent

judgement and integrity, provides the
Management Board with recommendations
related to selection, repeated appointment and
cancellation of an external audit company as
well as terms and conditions of agreement with
the audit company. The Management Board
submits proposals to the General Shareholders
Meeting taking into account recommendations of
the Audit Committee. Recommendations of the
Audit Committee are not obligatory to the
Management Board, ultimate decision is made
by the Management Board.
11
The Law of the Republic of Lithuania on Audit (Official Gazette, 2008, No 82-53233) determines that an Audit Committee shall be formed in each public
interest entity (including, but not limited to public companies whose securities are traded in the regulated market of the Republic of Lithuania and/or any
other member state ).

99
Yes / No /
Not
Applicable
Commentary
4.9. Committees established by the collegial

body should normally be composed of at least
three members. In companies with small number
of members of the collegial body, they could
exceptionally be composed of two members.
Majority of the members of each committee
should be constituted from independent
members of the collegial body. In cases when
the company chooses not to set up a
supervisory board, remuneration and audit
committees should be entirely comprised of nonexecutive directors. Chairmanship and
membership of the committees should be
decided with due regard to the need to ensure
that committee membership is refreshed and
that undue reliance is not placed on particular
individuals. Chairmanship and membership of
the committees should be decided with due
regard to the need to ensure that committee
membership is refreshed and that undue
reliance is not placed on particular individuals.
No
The Audit Committee is elected by the General

Shareholders Meeting, not by the Management
Board. The Audit Committee consists of 4 (four)
members, 1 (one) of them is independent.
Chairman of the Audit Committee is dependent
member.
4.10. Authority of each of the committees should

be determined by the collegial body. Committees
should perform their duties in line with authority
delegated to them and inform the collegial body
on their activities and performance on regular
basis. Authority of every committee stipulating
the role and rights and duties of the committee
should be made public at least once a year (as
part of the information disclosed by the company
annually on its corporate governance structures
and practices). Companies should also make
public annually a statement by existing
committees on their composition, number of
meetings and attendance over the year, and
their main activities. Audit committee should
confirm that it is satisfied with the independence
of the audit process and describe briefly the
actions it has taken to reach this conclusion.
No
Powers of the Audit Committee are presented in

Internal rules of the Audit Committee, approved
by the General Shareholders Meeting. Internal
rules of the Audit Committee state that the Audit
Committee informs the General Shareholders
Meeting about its activities at least 2 (two) times
a year by submitting written reports. If the
General Shareholders Meeting is convoked only
once a year, the obligation to inform the General
Shareholders Meeting about its activity for the
second time a year is not applied. Company also
submits information about functions, composition
and members of the Audit Committee in its
consolidated annual and six months reports.
4.11. In order to ensure independence and

impartiality of the committees, members of the
collegial body that are not members of the
committee should commonly have a right to
participate in the meetings of the committee only
if invited by the committee. A committee may
invite or demand participation in the meeting of
particular officers or experts. Chairman of each
of the committees should have a possibility to
maintain direct communication with the
shareholders. Events when such are to be
performed should be specified in the regulations
for committee activities.
Yes
Internal rules of the Audit Committee state that

members of the Audit Committee have the right
to invite the Head of the Company, Companys
Chief Finance Officer, employees responsible for
finances, accounting and budget issues, external
auditors into its meetings.

100
4.12. Nomination Committee.
Yes / No /
Not
Applicable
No
4.12.1. Key functions of the nomination

committee should be the following:
Commentary
Company has no nomination committee or
otherwise called committee in charge of the
functions of the former.
Identify and recommend, for the approval

of the collegial body, candidates to fill
board vacancies. The nomination
committee should evaluate the balance of
skills, knowledge and experience on the
management body, prepare a description
of the roles and capabilities required to
assume a particular office, and assess the
time commitment expected. Nomination
committee can also consider candidates to
members of the collegial body delegated
by the shareholders of the company;
Assess on regular basis the structure, size,
composition and performance of the
supervisory and management bodies, and
make recommendations to the collegial
body regarding the means of achieving
necessary changes;
Assess on regular basis the skills,
knowledge and experience of individual
directors and report on this to the collegial
body;
Properly consider issues related to
succession planning;
Review the policy of the management
bodies for selection and appointment of
senior management.
4.12.2. Nomination committee should consider

proposals by other parties, including
management and shareholders. When dealing
with issues related to executive directors or
members of the board (if a collegial body elected
by the general shareholders meeting is the
supervisory board) and senior management,
chief executive officer of the company should be
consulted by, and entitled to submit proposals to
the nomination committee.

101
Yes / No /
Not
Applicable
4.13. Remuneration Committee.
No
4.13.1. Key functions of the remuneration

committee should be the following:
Commentary
There is no remuneration committee or any
other committee that would be in charge of
carrying out functions of the committee of
remuneration.
Make proposals, for the approval of the

collegial body, on the remuneration policy
for members of management bodies and
executive directors. Such policy should
address all forms of compensation,
including the fixed remuneration,
performance-based remuneration
schemes, pension arrangements, and
termination payments. Proposals
considering performance-based
remuneration schemes should be
accompanied with recommendations on
the related objectives and evaluation
criteria, with a view to properly aligning the
pay of executive director and members of
the management bodies with the long-term
interests of the shareholders and the
objectives set by the collegial body;
Make proposals to the collegial body on the
individual remuneration for executive
directors and member of management
bodies in order their remunerations are
consistent with companys remuneration
policy and the evaluation of the
performance of these persons concerned.
In doing so, the committee should be
properly informed on the total
compensation obtained by executive
directors and members of the management
bodies from the affiliated companies;
Ensure that remuneration of individual
executive directors or members of
management body is proportionate to the
remuneration of other executive directors
or members of management body and
other staff members of the company;
Periodically review the remuneration policy
for executive directors or members of
management body, including the policy
regarding share-based remuneration, and
its implementation;
Make proposals to the collegial body on
suitable forms of contracts for executive
bodies;
Assist the collegial body in overseeing how
the company complies with applicable
provisions regarding the remunerationrelated information disclosure (in particular
the remuneration policy applied and
individual remuneration of directors);

102
Yes / No /
Not
Applicable
Commentary
Make general recommendations to the

executive directors and members of the
management bodies on the level and
structure of remuneration for senior
management (as defined by the collegial
body) with regard to the respective
information provided by the executive
bodies.
4.13.2. With respect to stock options and other

share-based incentives which may be granted to
directors or other employees, the committee
should:
Consider general policy regarding the

granting of the above mentioned schemes,
in particular stock options, and make any
related proposals to the collegial body;
Examine the related information that is
given in the companys annual report and
documents intended for the use during the
shareholders meeting;
Make proposals to the collegial body
regarding the choice between granting
options to subscribe shares or granting
options to purchase shares, specifying the
reasons for its choice as well as the
consequences that this choice has.
4.13.3. Upon resolution of the issues attributable

to the competence of the remuneration
committee, the committee should at least
address the chairman of the collegial body
and/or chief executive officer of the company for
their opinion on the remuneration of other
executive directors or members of the
management bodies.
4.13.4. The remuneration committee should
report on the exercise of its functions to the
shareholders and be present at the annual
general meeting for this purpose.
4.14. Audit Committee.
No
4.14.1. Key functions of the audit committee

should be the following:
Observe the integrity of the financial

information provided by the company, in
particular by reviewing the relevance and
consistency of the accounting methods
used by the company and its group
(including the criteria for the consolidation
of the accounts of companies in the group);
The Audit Committee follows this

recommendation only partially. The Audit
Committee performs functions specified in
Internal rules of the Audit Committee: provides
recommendations on selection of external audit
company as well as on the terms and conditions
of the agreement with the audit company;
observes the process of carrying out an external
audit and how the external auditor and audit
company follows the principles of independence
and objectivity; observes the process of
preparation of financial statements of the

103
Yes / No /
Not
Applicable
At least once a year review the systems of

internal control and risk management to
ensure that the key risks (inclusive of the
risks in relation with compliance with
existing laws and regulations) are properly
identified, managed and reflected in the
information provided;
Ensure the efficiency of the internal audit
function, among other things, by making
recommendations on the selection,
appointment, reappointment and removal
of the head of the internal audit department
and on the budget of the department, and
by monitoring the responsiveness of the
management to its findings and
recommendations. Should there be no
internal audit authority in the company, the
need for one should be reviewed at least
annually;
Make recommendations to the collegial
body related with selection, appointment,
reappointment and removal of the external
auditor (to be done by the general
shareholders meeting) and with the terms
and conditions of his engagement. The
committee should investigate situations
that lead to a resignation of the audit
company or auditor and make
recommendations on required actions in
such situations;
Monitor independence and impartiality of
the external auditor, in particular by
reviewing the audit companys compliance
with applicable guidance relating to the
rotation of audit partners, the level of fees
paid by the company, and similar issues. In
order to prevent occurrence of material
conflicts of interest, the committee, based
on the auditors disclosed inter alia data on
all remunerations paid by the company to
the auditor and network, should at all times
monitor nature and extent of the non-audit
services. Having regard to the principals
and guidelines established in the 16 May
2002 Commission Recommendation
2002/590/EC, the committee should
determine and apply a formal policy
establishing types of non-audit services
that are (a) excluded, (b) permissible only
after review by the committee, and (c)
permissible without referral to the
committee;
Review efficiency of the external audit
process and responsiveness of
management to recommendations made in
the external auditors management letter.
Commentary
Company; observes the efficiency of systems of
internal control, risk management and internal
audit, reviews efficiency of external audit
process and responsiveness of management of
the Company to recommendations and remarks
made in the external auditors management
letter. Representative of the audit company, the
Head of the Company and Chief Finance Officer
take part in the meetings of the Audit Committee
after receiving invitation of the Audit Committee.
Information about members of the Audit
Committee and their responsibilities is presented
in consolidated 6 months and annual reports and
in the Audit Committee activity reports presented
to the General Shareholders Meeting. Company
submits all documentation and reports
necessary to perform functions of the Audit
Committee after receiving such request. As
there are no internal audit function in the
Company, the Audit Committee cant perform all
recommendations specified in this principle
although the Audit Committee recommended to
implement this function as such possibility
emerges.

104
Yes / No /
Not
Applicable
Commentary
4.14.2. All members of the committee should be

furnished with complete information on
particulars of accounting, financial and other
operations of the company. Companys
management should inform the audit committee
of the methods used to account for significant
and unusual transactions where the accounting
treatment may be open to different approaches.
In such case a special consideration should be
given to companys operations in offshore
centres and/or activities carried out through
special purpose vehicles (organizations) and
justification of such operations.
4.14.3. The audit committee should decide
whether participation of the chairman of the
collegial body, chief executive officer of the
company, chief financial officer (or superior
employees in charge of finances, treasury and
accounting), or internal and external auditors in
the meetings of the committee is required (if
required, when). The committee should be
entitled, when needed, to meet with any relevant
person without executive directors and members
of the management bodies present.
4.14.4. Internal and external auditors should be
secured with not only effective working
relationship with management, but also with free
access to the collegial body. For this purpose
the audit committee should act as the principal
contact person for the internal and external
auditors.
4.14.5. The audit committee should be informed
of the internal auditors work program, and
should be furnished with internal audits reports
or periodic summaries. The audit committee
should also be informed of the work program of
the external auditor and should be furnished with
report disclosing all relationships between the
independent auditor and the company and its
group. The committee should be timely furnished
information on all issues arising from the audit.
4.14.6. The audit committee should examine
whether the company is following applicable
provisions regarding the possibility for
employees to report alleged significant
irregularities in the company, by way of
complaints or through anonymous submissions
(normally to an independent member of the
collegial body), and should ensure that there is a
procedure established for proportionate and
independent investigation of these issues and
for appropriate follow-up action.
4.14.7. The audit committee should report on its
activities to the collegial body at least once in
every six months, at the time the yearly and halfyearly statements are approved.

105
4.15. Every year the collegial body should
conduct the assessment of its activities. The
assessment should include evaluation of
collegial bodys structure, work organization and
ability to act as a group, evaluation of each of
the collegial body members and committees
competence and work efficiency and
assessment whether the collegial body has
achieved its objectives. The collegial body
should, at least once a year, make public (as
part of the information the company annually
discloses on its management structures and
practices) respective information on its internal
organization and working procedures, and
specify what material changes were made as a
result of the assessment of the collegial body of
its own activities.
Yes / No /
Not
Applicable
No
Commentary
The Management Board of the Company doesnt
have a practice to perform assessment of its
activity. Part of the information about internal
organization and activity procedures of the
Management Board are presented in
consolidated annual and 6 months reports.
Principle V: The working procedure of the companys collegial bodies

The working procedure of supervisory and management bodies established in the company should ensure efficient
operation of these bodies and decision-making and encourage active co-operation between the companys bodies.
5.1. The companys supervisory and
management bodies (hereinafter in this Principle
the concept collegial bodies covers both the
collegial bodies of supervision and the collegial
bodies of management) should be chaired by
chairpersons of these bodies. The chairperson
of a collegial body is responsible for proper
convocation of the collegial body meetings. The
chairperson should ensure that information
about the meeting being convened and its
agenda are communicated to all members of the
body. The chairperson of a collegial body should
ensure appropriate conducting of the meetings
of the collegial body. The chairperson should
ensure order and working atmosphere during the
meeting.
Yes
The Management Board is governed by its

Chairman. The meetings are presided by
Chairman of the Management Board or by the
other member of the Management Board, which
is elected to preside for the particular meeting.
Management Board work regulations specify
that Chairman has a duty, at his initiative or by
the offer of other Management Board member,
to convoke Management Board meetings, make
their agendas, prepare drafts of the decisions of
the Management Board and other related
documents or to appoint other responsible
persons to prepare them. The Chairman of the
Management Board must invite Head of the
Company into every Management Boards
meeting and give him a possibility to get
information about the agenda. The Management
Board Chairman has right to demand from the
Head of the Company to submit all information
about Companys economical and financial state
which is essential for the organization of the
Management Boards activity and decision
making.

106
Yes / No /
Not
Applicable
Commentary
5.2. It is recommended that meetings of the

companys collegial bodies should be carried out
according to the schedule approved in advance
at certain intervals of time. Each company is free
to decide how often to convene meetings of the
collegial bodies, but it is recommended that
these meetings should be convened at such
intervals, which would guarantee an interrupted
resolution of the essential corporate governance
issues. Meetings of the companys supervisory
board should be convened at least once in a
quarter, and the companys board should meet
12
at least once a month .
Yes
Management Board work regulations state that

meetings of the Management Board are
convoked at least once every quarter. The
meetings are organized if there is a need. The
Management Board had 12 meetings in 2010.
5.3. Members of a collegial body should be

notified about the meeting being convened in
advance in order to allow sufficient time for
proper preparation for the issues on the agenda
of the meeting and to ensure fruitful discussion
and adoption of appropriate decisions. Alongside
with the notice about the meeting being
convened, all the documents relevant to the
issues on the agenda of the meeting should be
submitted to the members of the collegial body.
The agenda of the meeting should not be
changed or supplemented during the meeting,
unless all members of the collegial body are
present or certain issues of great importance to
the company require immediate resolution.
Yes

that Chairman sends notice about the
Management Board meeting to each member of
the Management Board not later than 3 business
days till the meeting. The notice on the
Management Board meeting includes date, time,
and location of the meeting as well as draft of
agenda. Every member of the Management
board and Head of the Company can offer
additional questions for the agenda and the
Chairman of the Management Board must
include these questions into agenda if he gets
written suggestion to include these questions not
later than 3 days before the meeting. Final
agenda and materials for meetings of the
Management Board, including detailed
description on issues to be discussed in the
Management Board meeting and draft
resolutions are sent to the members of the
Management Board by the Chairman of the
Management Board not later than 2 business
days till the meeting. Members of the
Management Board have the right to decide to
discuss and vote on issues not included into
agenda or make resolutions the drafts whereof
were not properly presented, if the meeting is
attended by all members of the Management
Board and each of them agrees with it.
5.4. In order to co-ordinate operation of the

companys collegial bodies and ensure effective
decision-making process, chairpersons of the
companys collegial bodies of supervision and
management should closely co-operate by cocoordinating dates of the meetings, their
agendas and resolving other issues of corporate
governance. Members of the companys board
should be free to attend meetings of the
companys supervisory board, especially where
issues concerning removal of the board
members, their liability or remuneration are
discussed.
No
The Company can not comply with this

recommendation whereas it has only one
collegial body the Management Board.
12
The frequency of meetings of the collegial body provided for in the recommendation must be applied in those cases when both additional collegial bodies
are formed at the company, the board and the supervisory board. In the event only one additional collegial body is formed in the company, the frequency of
its meetings may be as established for the supervisory board, i.e. at least once in a quarter.

107
Yes / No /
Not
Applicable
Commentary
Principle VI: The equitable treatment of shareholders and shareholder rights

The corporate governance framework should ensure the equitable treatment of all shareholders, including minority
and foreign shareholders. The corporate governance framework should protect the rights of the shareholders.
6.1. It is recommended that the companys
capital should consist only of the shares that
grant the same rights to voting, ownership,
dividend and other rights to all their holders.
Yes
The Companys statutory capital consists of

ordinary registered shares granting the same
rights to all their holders.
6.2. It is recommended that investors should

have access to the information concerning the
rights attached to the shares of the new issue or
those issued earlier in advance, i.e. before they
purchase shares.
Yes
The information concerning the rights attached

to the shares of the new issue or those issued
earlier is available in the website of the
Company.
6.3. Transactions that are important to the

company and its shareholders, such as transfer,
investment, and pledge of the companys assets
or any other type of encumbrance should be
subject to approval of the general shareholders
13
meeting. All shareholders should be furnished
with equal opportunity to familiarize with and
participate in the decision-making process when
significant corporate issues, including approval
of transactions referred to above, are discussed.
No
Articles of Association of the Company state that

the Management Board makes decisions on any
merger, consolidation or acquisition, sale, lease
or other disposal of the Company, or all or
substantially all of the Companys assets.
6.4. Procedures of convening and conducting a

general shareholders meeting should ensure
equal opportunities for the shareholders to
effectively participate at the meetings and should
not prejudice the rights and interests of the
shareholders. The venue, date, and time of the
shareholders meeting should not hinder wide
attendance of the shareholders.
Yes
Information on the prospective General

Shareholders Meetings is announced through
informational system of NASDAQ and in the
Companys webpage. Meetings are convoked in
such a place that all shareholders could have
opportunities to attend them. Material for the
General Shareholders Meeting is available in the
Companys webpage and in the Company itself
not later than 21 days before the General
Shareholders Meeting, telephone for inquiries is
given.
13
The Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123-5574) no longer assigns resolutions concerning the investment,
transfer, lease, mortgage or acquisition of the long-terms assets accounting for more than 1/20 of the companys authorised capital to the competence of
the general shareholders meeting. However, transactions that are important and material for the companys activity should be considered and approved by
the general shareholders meeting. The Law on Companies contains no prohibition to this effect either. Yet, in order not to encumber the companys activity
and escape an unreasonably frequent consideration of transactions at the meetings, companies are free to establish their own criteria of material
transactions, which are subject to the approval of the meeting. While establishing these criteria of material transactions, companies may follow the criteria
set out in items 3, 4, 5 and 6 of paragraph 4 of Article 34 of the Law on Companies or derogate from them in view of the specific nature of their operation
and their attempt to ensure uninterrupted, efficient functioning of the company.

108
Yes / No /
Not
Applicable
Commentary
6.5. If is possible, in order to ensure

shareholders living abroad the right to access to
the information, it is recommended that
documents on the course of the general
shareholders meeting should be placed on the
publicly accessible website of the company not
only in Lithuanian language, but in English and
/or other foreign languages in advance. It is
recommended that the minutes of the general
shareholders meeting after signing them and/or
adopted resolutions should be also placed on
the publicly accessible website of the company.
Seeking to ensure the right of foreigners to
familiarize with the information, whenever
feasible, documents referred to in this
recommendation should be published in
Lithuanian, English and/or other foreign
languages. Documents referred to in this
recommendation may be published on the
publicly accessible website of the company to
the extent that publishing of these documents is
not detrimental to the company or the companys
commercial secrets are not revealed.
Yes
Shareholders living abroad are ensured the right

to access to the information because agenda
and draft resolutions of the General
Shareholders Meetings are announced through
informational system of NASDAQ and placed at
the Companys website in English and
Lithuanian in advance, resolutions and voting
results of the General Shareholders Meeting are
announced after the meeting on the same way
too.
6.6. Shareholders should be furnished with the

opportunity to vote in the general shareholders
meeting in person and in absentia. Shareholders
should not be prevented from voting in writing in
advance by completing the general voting ballot.
Yes
The Companys shareholders can realize their

right to attend the General Shareholders
Meetings either personally or through
representatives, if a person has a duly issued
power of attorney or contract on the transfer of
voting rights concluded. The Company furnishes
shareholders with opportunity to vote in advance
by filling general voting ballot.
6.7. With a view to increasing the shareholders

opportunities to participate effectively at
shareholders meetings, the companies are
recommended to expand use of modern
technologies by allowing the shareholders to
participate and vote in general meetings via
electronic means of communication. In such
cases security of transmitted information and a
possibility to identify the identity of the
participating and voting person should be
guaranteed. Moreover, companies could furnish
its shareholders, especially shareholders living
abroad, with the opportunity to watch
shareholder meetings by means of modern
technologies.
No
Up till now the Company had no necessity in

complying with this recommendation, because
foreign shareholders successfully realize their
rights by sending their representatives to attend
the General Shareholders Meetings or by
casting their vote in advance in the form of
general voting ballot.

109
Yes / No /
Not
Applicable
Commentary
Principle VII: The avoidance of conflicts of interest and their disclosure

The corporate governance framework should encourage members of the corporate bodies to avoid conflicts of interest
and assure transparent and effective mechanism of disclosure of conflicts of interest regarding members of the
corporate bodies.
7.1. Any member of the companys supervisory
and management body should avoid a situation,
in which his/her personal interests are in conflict
or may be in conflict with the companys
interests. In case such a situation did occur, a
member of the companys supervisory and
management body should, within reasonable
time, inform other members of the same collegial
body or the companys body that has elected
him/her, or to the companys shareholders about
a situation of a conflict of interest, indicate the
nature of the conflict and value, where possible.
Yes

and management body may not mix the
companys assets, the use of which has not
been mutually agreed upon, with his/her
personal assets or use them or the information
which he/she learns by virtue of his/her position
as a member of a corporate body for his/her
personal benefit or for the benefit of any third
person without a prior agreement of the general
shareholders meeting or any other corporate
body authorized by the meeting.
Yes

and management body may conclude a
transaction with the company, a member of a
corporate body of which he/she is. Such a
transaction (except insignificant ones due to
their low value or concluded when carrying out
routine operations in the company under usual
conditions) must be immediately reported in
writing or orally, by recording this in the minutes
of the meeting, to other members of the same
corporate body or to the corporate body that has
elected him/her or to the companys
shareholders. Transactions specified in this
recommendation are also subject to
recommendation 4.5.
Yes

and management body should abstain from
voting when decisions concerning transactions
or other issues of personal or business interest
are voted on.
Yes
Members of the Management Board behave

according to these recommendations, Company
is not aware of any cases when their personal
interests contradicted Companys interests.
that members of the Management Board have
an obligation to avoid situations in which their
personal interests are in conflict with the
Companys interests, to inform the Management
Board about the uprise of such situations and
about all transactions concluded between them
and the Company. Management Board work
regulations oblige the members of the
Management Board do not mix the Companys
assets with their personal assets and do not use
the information which he learnt by virtue of their
positions as a members of the Management
Board for their personal benefit or for the benefit
of third persons otherwise as permitted by the
General Shareholders Meeting and the
Management Board and also to submit the
information about their or closely related persons
made transactions on Companies securities by
the order and terms specified in legal acts.
Following Management Board work regulations,

member of the Management Board is not
entitled to vote when Management Board
meeting is making a decision on his liability
issues or personal matters relating to his work
on the Management Board.

110
Yes / No /
Not
Applicable
Commentary
Principle VIII: Companys remuneration policy

Remuneration policy and procedure for approval, revision and disclosure of directors remuneration established in the
company should prevent potential conflicts of interest and abuse in determining remuneration of directors, in addition it
should ensure publicity and transparency both of companys remuneration policy and remuneration of directors.
8.1. A company should make a public statement
of the companys remuneration policy
(hereinafter the remuneration statement) which
should be clear and easily understandable. This
remuneration statement should be published as
a part of the companys annual statement as
well as posted on the companys website.
No
The Company does not prepare remuneration

statement. Brief information on remuneration
system applied to employees of the Company
and payments made to the members of the
Management Board, Head of the Company and
Chief Finance Officer is presented in
consolidated 6 months and annual reports which
are placed at Companys webpage.
8.2. Remuneration statement should mainly

focus on directors remuneration policy for the
following year and, if appropriate, the
subsequent years. The statement should contain
a summary of the implementation of the
remuneration policy in the previous financial
year. Special attention should be given to any
significant changes in companys remuneration
policy as compared to the previous financial
year.
No
8.3. Remuneration statement should leastwise

include the following information:
No
Explanation of the relative importance of

the variable and non-variable components
of directors remuneration;
Sufficient information on performance
criteria that entitles directors to share
options, shares or variable components of
remuneration;
An explanation how the choice of
performance criteria contributes to the
long-term interests of the company;
An explanation of the methods, applied in
order to determine whether performance
criteria have been fulfilled;
Sufficient information on deferment periods
with regard to variable components of
remuneration;
Sufficient information on the linkage
between the remuneration and
performance;
The main parameters and rationale for any
annual bonus scheme and any other noncash benefits;
Sufficient information on the policy
regarding termination payments;
Sufficient information with regard to vesting
periods for share-based remuneration, as
referred to in point 8.13 of this Code;
Sufficient information on the policy
regarding retention of shares after vesting,
as referred to in point 8.15 of this Code;

111
Yes / No /
Not
Applicable
Commentary
Sufficient information on the composition of

peer groups of companies the
remuneration policy of which has been
examined in relation to the establishment
of the remuneration policy of the company
concerned;
A description of the main characteristics of
supplementary pension or early retirement
schemes for directors;
Remuneration statement should not
include commercially sensitive information.
8.4. Remuneration statement should also

summarize and explain companys policy
regarding the terms of the contracts executed
with executive directors and members of the
management bodies. It should include, inter alia,
information on the duration of contracts with
executive directors and members of the
management bodies, the applicable notice
periods and details of provisions for termination
payments linked to early termination under
contracts for executive directors and members of
the management bodies.
No
8.5. Remuneration statement should also

contain detailed information on the entire
amount of remuneration, inclusive of other
benefits, that was paid to individual directors
over the relevant financial year. This document
should list at least the information set out in
items 8.5.1 to 8.5.4 for each person who has
served as a director of the company at any time
during the relevant financial year.
No
8.5.1. The following remuneration and/or

emoluments-related information should be
disclosed:
The total amount of remuneration paid or

due to the director for services performed
during the relevant financial year, inclusive
of, where relevant, attendance fees fixed
by the annual general shareholders
meeting;
The remuneration and advantages
received from any undertaking belonging to
the same group;
The remuneration paid in the form of profit
sharing and/or bonus payments and the
reasons why such bonus payments and/or
profit sharing were granted;
If permissible by the law, any significant
additional remuneration paid to directors
for special services outside the scope of
the usual functions of a director;
Compensation receivable or paid to each
former executive director or member of the
management body as a result of his
resignation from the office during the
previous financial year;

112
Yes / No /
Not
Applicable
Commentary
Total estimated value of non-cash benefits

considered as remuneration, other than the
items covered in the above points.
8.5.2. As regards shares and/or rights to acquire

share options and/or all other share-incentive
schemes, the following information should be
disclosed:
The number of share options offered or

shares granted by the company during the
relevant financial year and their conditions
of application;
The number of shares options exercised
during the relevant financial year and, for
each of them, the number of shares
involved and the exercise price or the value
of the interest in the share incentive
scheme at the end of the financial year;
The number of share options unexercised
at the end of the financial year; their
exercise price, the exercise date and the
main conditions for the exercise of the
rights;
All changes in the terms and conditions of
existing share options occurring during the
financial year.
8.5.3. The following supplementary pension

schemes-related information should be
disclosed:
When the pension scheme is a definedbenefit scheme, changes in the directors

accrued benefits under that scheme during
the relevant financial year;
When the pension scheme is definedcontribution scheme, detailed information
on contributions paid or payable by the
company in respect of that director during
the relevant financial year.
8.5.4. The statement should also state amounts

that the company or any subsidiary company or
entity included in the consolidated annual
financial report of the company has paid to each
person who has served as a director in the
company at any time during the relevant
financial year in the form of loans, advance
payments or guarantees, including the amount
outstanding and the interest rate.
8.6. Where the remuneration policy includes
variable components of remuneration,
companies should set limits on the variable
component(s). The non-variable component of
remuneration should be sufficient to allow the
company to withhold variable components of
remuneration when performance criteria are not
met.
Not applicable
There is no such directors remuneration policy

including variable components of remuneration
in the Company.

113
Yes / No /
Not
Applicable
Commentary
8.7. Award of variable components of

remuneration should be subject to
predetermined and measurable performance
criteria.
Not applicable
8.8. Where a variable component of

remuneration is awarded, a major part of the
variable component should be deferred for a
minimum period of time. The part of the variable
component subject to deferment should be
determined in relation to the relative weight of
the variable component compared to the nonvariable component of remuneration.
Not applicable
8.9. Contractual arrangements with executive or

managing directors should include provisions
that permit the company to reclaim variable
components of remuneration that were awarded
on the basis of data which subsequently proved
to be manifestly misstated.
Not applicable
8.10. Termination payments should not exceed a

fixed amount or fixed number of years of annual
remuneration, which should, in general, not be
higher than two years of the non-variable
component of remuneration or the equivalent
thereof.
Not applicable
Termination payments paid by the Company are

fixed by the applicable labour law.
8.11. Termination payments should not be paid if

the termination is due to inadequate
performance.
Yes
There were no situations when termination

payments were paid after termination of
employment agreement because of inadequate
performance during the reporting period.
Situations when the Company pays termination
payments are specified by the applicable labour
law.
8.12. The information on preparatory and

decision-making processes, during which a
policy of remuneration of directors is being
established, should also be disclosed.
Information should include data, if applicable, on
authorities and composition of the remuneration
committee, names and surnames of external
consultants whose services have been used in
determination of the remuneration policy as well
as the role of shareholders annual general
meeting.
No
See comments to the clauses 8.1 and 8.6.
8.13. Shares should not vest for at least three

years after their award.
Not applicable
There is no remuneration policy supported by

share vesting in the Company.

114
Yes / No /
Not
Applicable
Commentary
8.14. Share options or any other right to acquire

shares or to be remunerated on the basis of
share price movements should not be
exercisable for at least three years after their
award. Vesting of shares and the right to
exercise share options or any other right to
acquire shares or to be remunerated on the
basis of share price movements, should be
subject to predetermined and measurable
performance criteria.
Not applicable
There are no share options plans based on the

right to acquire shares or to be remunerated on
the basis of share price movement in the
Company. Company has valid Phantom Share
Option Plan approved by the General
Shareholders meeting in 2009 and applied for
the top and middle management of the
Company and its subsidiaries. According to
Phantom Share Option Plan option is exercised
not through the acquisition of the option shares
but by receiving a monetary compensation after
the sale of the Companys shares by certain
shareholders of the Company. If Phantom Share
Option Plan is not executed until the end of
2013, it will terminate automatically.
8.15. After vesting, directors should retain a

number of shares, until the end of their mandate,
subject to the need to finance any costs related
to acquisition of the shares. The number of
shares to be retained should be fixed, for
example, twice the value of total annual
remuneration (the non-variable plus the variable
components).
Not applicable
See comments to the clauses 8.13 and 8.14.
8.16. Remuneration of non-executive or

supervisory directors should not include share
options.
Yes
8.17. Shareholders, in particular institutional

shareholders, should be encouraged to attend
general meetings where appropriate and make
considered use of their votes regarding directors
remuneration.
Yes
Shareholders are encouraged to attend the

General Shareholders Meetings by informing
them about coming General Shareholders
Meetings, encouraging voting in advance by
filling general voting ballots.
8.18. Without prejudice to the role and

organization of the relevant bodies responsible
for setting directors remunerations, the
remuneration policy or any other significant
change in remuneration policy should be
included into the agenda of the shareholders
annual general meeting. Remuneration
statement should be put for voting in
shareholders annual general meeting. The vote
may be either mandatory or advisory.
No
See comments to clauses 8.1 and 8.14.

Companys Phantom Share Option Plan was
approved by the General Shareholders Meeting.

115
8.19. Schemes anticipating remuneration of
directors in shares, share options or any other
right to purchase shares or be remunerated on
the basis of share price movements should be
subject to the prior approval of shareholders
annual general meeting by way of a resolution
prior to their adoption. The approval of scheme
should be related with the scheme itself and not
to the grant of such share-based benefits under
that scheme to individual directors. All significant
changes in scheme provisions should also be
subject to shareholders approval prior to their
adoption; the approval decision should be made
in shareholders annual general meeting. In such
case shareholders should be notified on all
terms of suggested changes and get an
explanation on the impact of the suggested
changes.
Yes / No /
Not
Applicable
Not applicable
Commentary
See comments to clauses 8.1 and 8.14.
8.20. The following issues should be subject to

approval by the shareholders annual general
meeting:
Grant of share-based schemes, including

share options, to directors;
Determination of maximum number of
shares and main conditions of share
granting;
The term within which options can be
exercised;
The conditions for any subsequent change
in the exercise of the options, if permissible
by law;
All other long-term incentive schemes for
which directors are eligible and which are
not available to other employees of the
company under similar terms. Annual
general meeting should also set the
deadline within which the body responsible
for remuneration of directors may award
compensations listed in this article to
individual directors.
8.21. Should national law or companys Articles

of Association allow, any discounted option
arrangement under which any rights are granted
to subscribe to shares at a price lower than the
market value of the share prevailing on the day
of the price determination, or the average of the
market values over a number of days preceding
the date when the exercise price is determined,
should also be subject to the shareholders
approval.

116
Yes / No /
Not
Applicable
Commentary
8.22. Provisions of Articles 8.19 and 8.20 should

not be applicable to schemes allowing for
participation under similar conditions to
companys employees or employees of any
subsidiary company whose employees are
eligible to participate in the scheme and which
has been approved in the shareholders annual
general meeting.
8.23. Prior to the annual general meeting that is
intended to consider decision stipulated in Article
8.19, the shareholders must be provided an
opportunity to familiarize with draft resolution
and project-related notice (the documents
should be posted on the companys website).
The notice should contain the full text of the
share-based remuneration schemes or a
description of their key terms, as well as full
names of the participants in the schemes. Notice
should also specify the relationship of the
schemes and the overall remuneration policy of
the directors. Draft resolution must have a clear
reference to the scheme itself or to the summary
of its key terms. Shareholders must also be
presented with information on how the company
intends to provide for the shares required to
meet its obligations under incentive schemes. It
should be clearly stated whether the company
intends to buy shares in the market, hold the
shares in reserve or issue new ones. There
should also be a summary on scheme-related
expenses the company will suffer due to the
anticipated application of the scheme. All
information given in this article must be posted
on the companys website.
Principle IX: The role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders as established by law and
encourage active co-operation between companies and stakeholders in creating the company value, jobs and
financial sustainability. For the purposes of this Principle, the concept stakeholders includes investors, employees,
creditors, suppliers, clients, local community and other persons having certain interest in the company concerned.
9.1. The corporate governance framework
should assure that the rights of stakeholders that
are protected by law are respected.
Yes
9.2. The corporate governance framework

should create conditions for the stakeholders to
participate in corporate governance in the
manner prescribed by law. Examples of
mechanisms of stakeholder participation in
corporate governance include: employee
participation in adoption of certain key decisions
for the company; consulting the employees on
corporate governance and other important
issues; employee participation in the companys
share capital; creditor involvement in
governance in the context of the companys
insolvency, etc.
The Companys management system ensures

that the rights of stakeholders are not infringed.
Rights of employees are protected by labour law
and collective agreement. The Company
exercises consultations with the representatives
of the employees (labour unions) on the material
issues. Suppliers, clients and creditors have
signed agreements with the Company,
appropriate performance of the obligations
specified in these agreements is one of the
Companys priorities. All material and additional
information about the Company is announced
publicly and is also provided to representatives
of stakeholders at their request.
9.3. Where stakeholders participate in the

corporate governance process, they should have
access to relevant information.
117
Yes / No /
Not
Applicable
Commentary
Principle X: Information disclosure and transparency

The corporate governance framework should ensure that timely and accurate disclosure is made on all material
information regarding the company, including the financial situation, performance and governance of the company.
10.1. The company should disclose
information on:
Yes
The financial and operating results of the

company;
Company objectives;
Persons holding by the right of ownership
or in control of a block of shares in the
company;
Members of the companys supervisory
and management bodies, chief executive
officer of the company and their
remuneration;
Material foreseeable risk factors;
Transactions between the company and
connected persons, as well as transactions
concluded outside the course of the
companys regular operations;
Material issues regarding employees and
other stakeholders;
Governance structures and strategy.
Information on the Company set forth in these

recommendations is published in Companys
webpage, through NASDAQ informational
system, in press releases.
This list should be deemed as a minimum

recommendation, while the companies are
encouraged not to limit themselves to disclosure
of the information specified in this list.
10.2. It is recommended to the company, which
is the parent of other companies, that
consolidated results of the whole group to which
the company belongs should be disclosed when
information specified in item 1 of
Recommendation 10.1 is under disclosure.
10.3. It is recommended that information on the
professional background, qualifications of the
members of supervisory and management
bodies, chief executive officer of the company
should be disclosed as well as potential conflicts
of interest that may have an effect on their
decisions when information specified in item 4 of
Recommendation 10.1 about the members of
the companys supervisory and management
bodies is under disclosure. It is also
recommended that information about the amount
of remuneration received from the company and
other income should be disclosed with regard to
members of the companys supervisory and
management bodies and chief executive officer
as per Principle VIII.

118
Yes / No /
Not
Applicable
Commentary
10.4. It is recommended that information about

the links between the company and its
stakeholders, including employees, creditors,
suppliers, local community, as well as the
companys policy with regard to human
resources, employee participation schemes in
the companys share capital, etc. should be
disclosed when information specified in item 7 of
Recommendation 10.1 is under disclosure.
10.5. Information should be disclosed in such a
way that neither shareholders nor investors are
discriminated with regard to the manner or
scope of access to information. Information
should be disclosed to all simultaneously. It is
recommended that notices about material events
should be announced before or after a trading
session on the Vilnius Stock Exchange, so that
all the companys shareholders and investors
should have equal access to the information and
make informed investing decisions.
Yes
The Company announces information in

Lithuanian and English through information
disclosure system of NASDAQ. NASDAQ
publishes this information on its webpage and in
its market system ensuring simultaneous
disclosure of information to everyone.
Information prospectively able of influencing
price of issued stock is not disclosed by the
Company in its comments, interview or by other
means as long as this type of information is not
publicly announced through informational
system.
10.6. Channels for disseminating information

should provide for fair, timely and cost-efficient
or in cases provided by the legal acts free of
charge access to relevant information by users.
It is recommended that information technologies
should be employed for wider dissemination of
information, for instance, by placing the
information on the companys website. It is
recommended that information should be
published and placed on the companys website
not only in Lithuanian, but also in English, and,
whenever possible and necessary, in other
languages as well.
Yes
Company ensures fair, timely and free of charge

access to information by announcing it through
information disclosure system of NASDAQ and
on its webpage in Lithuanian and English.

annual reports and other periodical accounts
prepared by the company should be placed on
the companys website. It is recommended that
the company should announce information about
material events and changes in the price of the
companys shares on the Stock Exchange on
the companys website too.
Yes
The Company complies with this

recommendation by announcing all information
enumerated in this recommendation on
Companys webpage.
Principle XI: The selection of the companys auditor

The mechanism of the selection of the companys auditor should ensure independence of the firm of auditors
conclusion and opinion.
11.1. An annual audit of the companys financial
reports and interim reports should be conducted
by an independent firm of auditors in order to
provide an external and objective opinion on the
companys financial statements
No
Audit of interim financial statements is not

performed. Audit company performing audit of
annual financial statements submits document
confirming its independence to the Company.

supervisory board and, where it is not set up, the
companys board should propose a candidate
firm of auditors to the general shareholders
meeting.
Yes
Candidate firm of auditors is offered to the

General Shareholders Meeting by the
Management Board.

119
11.3. It is recommended that the company
should disclose to its shareholders the level of
fees paid to the firm of auditors for non-audit
services rendered to the company. This
information should be also known to the
companys supervisory board and, where it is
not formed, the companys board upon their
consideration which firm of auditors to propose
for the general shareholders meeting.
Yes / No /
Not
Applicable
Yes
Commentary
Previously to the election, firm of auditors
presents the Company with a certificate on fees
paid to firm of auditors for audit and non-audit
services. The Management Board presents
information contained in this certificate to the
General Shareholders Meeting electing firm of
auditors.

120

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PUBLIC LIMITED LIABILITY COMPANY SANITAS

CONSOLIDATED AND SEPARATE FINANCIAL

ANNUAL REPORT FOR THE YEAR ENDED

Public limited liability company SANITAS

Chief Financial Officer

UAB Deloitte Lietuva

Independent auditors report

Report on Other Legal and Regulatory Requirements

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Registered office and company code

Mr. Saulius Jurgelenas

Mr. Nerijus Drobavicius

Statements of Comprehensive Income

Selling and distribution expenses

Regulatory affairs expenses

Research and development expenses

Profit (loss) before tax

Profit (loss) for the period

Other comprehensive income (expense):

Income tax (expense) relating to components of

Other comprehensive income

The notes on pages 15 to 60 are an integral part of these financial statements.

Public limited liability company SANITAS

Other non-current financial assets

Deferred tax asset

Total non-current assets

Prepaid income tax

Prepayments and deferred expenses

Cash and cash equivalents

Total current assets

Public limited liability company SANITAS

Balance Sheets (contd)

EQUITY AND LIABILITIES

Fair value reserve

Finance lease obligations

Other non-current financial liabilities

Deferred tax liability

Deferred income from subsidies

Employee benefit liability

Total non-current liabilities

Current portion of non-current finance lease

Income tax payable

Other current financial liabilities

Other current liabilities

Employee benefit liability

Total current liabilities

Total equity and liabilities

The notes on pages 15 to 60 are an integral part of these financial statements.

Public limited liability company SANITAS

Statements of Changes in Equity

Net profit for the year

Total income and

Net profit for the year

Net (loss) for the year

Total (expense) for the year

Net (loss) for the year

Total (expense) for the year

Balance as at 1 January 2009

The notes on pages 15 to 60 are an integral part of these financial statements.

Public limited liability company SANITAS

Cash Flow Statements

Cash flows from (to) operating activities

Loss from disposal and write-off of

Change in value of financial instruments